The ink was barely dry

The ink on the new healthcare legislation was barely dry before, it seemed, the trade press was full of new information about its impact.

Quoting a report from Moody's, HealthLeaders Media said last week that "healthcare reform is a long-term net negative for the not-for-profit hospital sector because it will effectively reduce revenues to hospitals." The report, as referenced, is Long-term Credit Challenges of Healthcare Reform Outweigh Benefits for Not-for-Profit Hospitals.

A posting on the website of health care financial executives, hfma, said the "reform legislation will squeeze savings out of Medicare and increase regulatory oversight for private insurers, resulting in more difficult negotiations with commercial and managed care payers. Many not-for-profit hospitals will struggle. . . "

Two weeks ago an article in the New England Journal of Medicine took an ominous look at the untenable growth of federal debt in the light of health care reform. In "The Specter of Financial Armageddon -- Health Care and Federal Debt in the United States," NEJM said, "Growth in health care spending in one of the primary contributors to increases in (federal) debt over the long run, so the long-term strategy must involve slowing the growth."

The ratio of debt to gross domestic product (GDP) was 53% in the US last year. "Economies can bear substantial debt . . ." according to the NEJM authors, "but there is a limit to how high debt can rise and still be financed without causing serious economic harm." The debt-to-GDP limit set by the European Union is 60%, although some European countries exceed that and some experts apparently claim that a 90% ratio is OK. The authors report the trend of federal income and expense suggests the US will blow past a 90% debt-to-GDP ratio by 2020. "[O]ur structural debt places us on a path of debt growth that is unsustainable," they say, "largely because of health care programs."

Last week HANYS, New York's hospital association, predicted the impact of health care reform over a ten-year period for each hospital in the state. It's a stark picture. The health care reform legislation is expected to reduce New York's hospital revenues by $13.5 billion over the period.

There are 26 hospitals in the Central New York region, including four in Syracuse. The total impact in Central New York, according to HANYS, will be a negative $910 million. That affects 26 hospitals at an average $34.7 million reduction each (again, over ten years). If anything, this may be understated since the combined impact of the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act will be phased over a number of years.

Because of healthcare reform, Community General is expected to receive $36.3 million less, according to the HANYS model. The total reduction for the four non-federal Syracuse hospitals is estimated at $425.1 million.

HANYS has not estimated the increased revenues hospitals would receive because more patients are expected to have health insurance as a result of health care reform. There is, as yet, no forecast of that additional revenue, but it is hard to believe it could offset the magnitude of lost revenue -- or even come close.

The health care reform legislation has many parts, and its impact will be felt in many ways over the coming years. This much seems pretty clear: the legislation will be transformative.