Hospital Rivals Explore Benefits of Partnership

by Mark Friedman  on Monday, Oct. 1, 2012 12:00 am  


A Nationwide Phenomenon

Hospitals around the country are scrambling to form relationships with other hospitals.

The Great Recession caused people to delay medical treatment, resulting in a drop in hospital admissions, wrote Moody’s Goldstein. Uncompensated care, though, has risen. Access to capital markets also proved difficult for some smaller hospitals.

Another financial blow to hospitals came as a result of the Patient Protection & Affordable Care Act, which passed in 2010. One of the goals of health care reform is lowering the cost of Medicare, the federal government’s uniform insurance program for senior citizens.

“Annual reductions to Medicare inpatient hospital payment rates are now hardwired into the Medicare payment formula,” Goldstein wrote.

Hospitals could lose even more revenue if Congress fails to address the sequestration section of the 2011 Budget Control Act when a number of tax increases and automatic spending cuts are set to kick in on Jan. 1. Rahn said UAMS would lose an estimated $12 million a year in revenue if the mandatory cuts go forward.

And if Arkansas doesn’t expand Medicaid, as encouraged by the Af-

fordable Care Act, UAMS would miss out on $22 million in new revenue starting in 2014, he said.


Partnerships Rewarded

Hospitals now have a financial motive to form partnerships and slash costs.



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