Analyzing the pressures on admissions
Dec 6, 2011
The biggest factor pressuring admissions is the continued high levels of unemployment, and in particular the large numbers who have been unemployed or underemployed for significant periods. Since the majority of people get health insurance coverage from their employer, as people lose their jobs they lose coverage. However, a defining factor of this economic cycle has been the large numbers of workers who have remained unemployed for significant periods thus not only losing coverage but also their ability replace coverage before extension of coverage under COBRA expires. In addition, given the damage done to family balance sheets by the combined effects of both the housing crisis and the ensuing disruption to the capital markets, some of those who have been able to find work have been required to accept positions which are not comparable to their prior positions and/or less than full time employment, often leaving them unable to afford health care coverage or obtain it through their employer, further reducing the rolls of the insured.
Another contributing factor has been the increase in health plan consumer cost sharing and the increased use of high deductible health plans (HDHPs)/consumer driven health plans (CDHPs). For example, according to the Kaiser/HRET Employer Health Benefit Survey, between 2007 and 2011 the average annual family contribution to healthcare insurance premiums and the average annual family deductible for a PPO plan have risen at annual rates of approximately 6% and 10% respectively. In addition, according to the National Business Group on Health/Towers Watson Employer Survey on Purchasing Value in Health Care, the percentage of employers offering a CDHP is expected to reach over 74% in 2013 from only 2% in 2002. As a result of higher co-pays & deductibles, studies such as one which recently appeared in the Journal of Managed Care, have found that enrollees in such plans use lower levels of medical services and preventative medicine vs. comparable enrollees. As a result, anecdotal evidence has shown that people with coverage now appear to be deferring elective procedures and even some not previously viewed as elective.
Additional pressure is also being felt as a result of the rise in observation stays, which typically require a patient be observed as an outpatient for 24 hours before being admitted or discharged. Not only are these stays not counted as inpatient admissions decreasing utilization figures but since reimbursement is at dramatically lower rates they tend to markedly impact revenues as well. Unfortunately, given the European sovereign debt crisis, the U.S. deficit debate and continued focus by employers on controlling healthcare costs as well as regulatory scrutiny on observation visits all factors appear likely to persist at least near-term.
As such it is important to carefully review capacity planning answering questions such as: Are resources devoted to observation patients aligned with reimbursement rates and differentiated from those applied to inpatients? Have you undertaken capacity reviews given the employment outlook for your local markets? Are you tracking trends in commercial plan enrollment among the relevant MCO's in your local markets?