Future Role of Hospitals

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The Future Role of Hospitals

Daniel A. Ponce

Our Lady of the Lake University

HCMG – 7325 Health Care Planning and Policy

Universal health care is on the way for all Americans. President Obama's Health Care Reform will mandate that all Americans have medical insurance by 2014. (Jackson & Nolen, 2010) Either the employers will provide the medical insurance or the individual will have to purchased the medical insurance themselves. Who is responsible for purchasing the medical insurance depends on several factors but those details are not the scope of this paper. The key point of the health care reform law is that every American will be mandated to have medical insurance.

Universal health care coverage will have a major impact on all aspects of health care. We will focus on the impact of universal health care on hospitals. There is no doubt, that all hospitals will have to make major changes in their day to day operations. As the new law takes effect, the hospitals will have to evolve to meet the new requirements. A transformation will need to take place in order to adjust to the new volume of patients that can be expected after the mandate is put in place. The role the hospitals will play in the future will depend on many different factors. We will investigate these evolving roles as we examine what the future role of hospitals will be in America.

Today there are 5,815 registered hospitals in the United States. Of the 5,815 registered hospitals, 5,010 are community based hospitals. There are 2,923 Not-for-Profit community hospitals, 982 For-Profit community hospitals and 1,105 state and local government community hospitals. The remainder of the hospitals are comprised of Federal Government hospitals, Nonfederal Psychiatric Hospitals, Nonfederal Long Term Care Hospitals and a number of Hospital Units of Institutions. ("Fast Facts", 2010)

Each year over 35 million people are admitted to the hospital. More than 118 million people are treated in the emergency department and 481 million people are treated as outpatients. Hospitals also deliver over 4 million babies each year. In 2006, hospitals provided care to people in need at a cost of over $31 billion of care for which no payment was received.("Hospital Facts", 2008) The Emergency Medical Treatment and Active Labor Act (EMTALA) require all hospitals to screen each patient that comes through the Emergency Department. (Emtala.com, n.d.) If an emergent condition is found, they must stabilize the patient. Many times these emergent patients do not have insurance or a means to pay for their care.

In the future, hospitals will be asked to do more while keeping cost down. A major role hospitals will have to play in the future is that of cost containment. Today, one third of hospitals lose money on operations. They have a meager operating margin of only 4% on average. It will be very difficult for many hospitals to keep their doors open in the future if they continue to lose money. Hit the hardest are the rural hospitals. It has become more and more difficult for rural hospitals to stay in business. During the decade of the 1990's, 186 hospitals closed their doors and went out of business. ("Cracks in the Foundation", 2002)

One major reason hospitals have a hard time with their operating cost is because of payment shortfalls from Medicare and Medicaid. Roughly 54% of gross revenues come from the charges to Medicare and Medicaid. In 2003, Medicare accounted for 40.4% percent of the hospitals' gross revenues and Medicaid accounted for 14.4% of the hospitals' gross revenues. The hospitals' financial performance is based on these government payments because they cover the majority of the patients seen. In fact, the majority of hospitals lose money in treating Medicare and Medicaid patients. In 2003, 59% of the hospitals were losing money treating Medicare patients and 61% of the...
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