Is your organization at risk of going from a profit to a loss when Health Exchanges are introduced?

I recently analyzed client data to evaluate the potential impact of health exchanges entering a market. Although I expected a moderate impact, I was surprised at how much a hospital could be affected by poor health exchange contracts.

As shown in the table below, the introduction of health exchanges to an example hospital’s market is expected to significantly reduce the number of patients covered under commercial insurance. In addition, the number of Medicaid beneficiaries will go up, and the number of self-pay patients will go down. Ultimately, this hospital will shift from a profit of $2.1 million to a loss of approximately $1.2, a change of $3.3 million. Analyzing the potential financial impact for your organization within a likely range of both reimbursement rates and payor mix shift will be a key component of your strategic planning for health exchanges.

Health_Exchange_Revenue_Financial-Impact-Example_Web

Be aware of the potential utilization and cost-of-care risks of health exchange-covered patients. You will need to determine if the care for any given patient population is manageable based upon likely rates of reimbursement. Preparing for health exchanges will require significant due diligence to analyze the potential impact and develop a proactive negotiation approach to secure network agreements that place your organization in a positive financial position.

Read more about how health exchanges might have an effect on your bottom line. What are some of your concerns about health exchanges?

This entry was posted in CMMI, Healthcare Reform, Managed Care Contracting, Uncategorized and tagged , , by Jason C. Lee. Bookmark the permalink.

About Jason C. Lee

Jason is a member of the Healthcare practice at ECG. He has over a decade of consulting experience in strategic planning, hospital/physician alignment, and commercial contracting. His current practice focuses on managed care contract analysis and negotiation, development of hospital/physician financial relationships, and assessment of physician productivity. His projects have resulted in financial and operational success for a myriad of clients. He has a master of public health degree from San Diego State University and bachelor of arts degrees in both human biodynamics and molecular and cell biology from the University of California, Berkeley

One thought on “Is your organization at risk of going from a profit to a loss when Health Exchanges are introduced?

  1. Pingback: Member Premium Support for Health Exchange Plans – Regulatory Update | ECG Management Consultants, Inc.

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