Impact of the ACA on Financially Distressed Health Care Providers

The Center for Law, Health & Society co-sponsored a Sept. 30 panel in the College of Law’s “From the Tower to the Trenches” CLE Series on the Affordable Care Act’s impact on financially distressed providers and patients and the different challenges faced by different health systems.

The series brings together faculty members and practicing attorneys to discuss legal issues. This session, “Full of Patients but Low on Cash: Managing Conflicts between Health Care Needs and Budget Woes,” featured William H. Boling, owner and principal of Boling and Co.; Samantha R. Johnson (J.D. ’03, M.B.A. ’14, M.H.A. ’14), senior associate general counsel at Grady Health System; Samuel R. Maizel, partner of the Restructuring, Insolvency and Bankruptcy Group at Dentons; and Professor Jack F. Williams.

“The way we deliver health care is one of the largest political issues facing our country,” said Maizel, who was the 2016 Southeastern Bankruptcy Law Institute Visiting Distinguished Professor. “The shift to pay for outcomes rather than services can disproportionately negatively impact already distressed hospitals serving lower-income patients.”

For example, hospitals receive less in reimbursement if a patient is readmitted within 30 days of discharge. However, the greatest predictor for readmission is socioeconomic status. “The patients served by safety net hospitals, like Grady, often are uninsured and low income,” Johnson said. “These patients may not be able to make follow-up appointments due to lack of transportation, inability to take time off from work, or are unable to purchase their medication and food.”

Patient satisfaction is also considered in reimbursement; however, satisfaction scores often have less to do with quality of care than with the building’s physical appearance, staff friendliness, or quality of the food. Yet, budget constraints prevent financially distressed hospitals from spending on these kinds of items.

Rural health care faces additional challenges. “Georgia is tied for second in the nation with the most hospital closures. When a hospital closes it reduces access to care but also hurts the local economy and employment market,” Boling said. “Rural health care practice is adapting by developing affiliations with larger facilities and sharing resources.”

Hospital closures increase the distance between patients and health care facilities, which can be dangerous in an emergency and reduce the health outcomes generally in the local area. Increasing use of telemedicine, which allows patients to be seen by specialists who are far away is a new and growing trend in supporting access to health care at the local level, said Boling.

Looking at the future, Maizel predicted more health care facilities will face bankruptcy or restructuring if the ACA is repealed given the industry changes since the law’s passage.