Hundreds of thousands of Kentuckians have gained health coverage under the Affordable Care Act, but hospital officials say their business is suffering because of it.
"The government's success in expanding health coverage has come at a significant cost to Kentucky hospitals," according to a report from the Kentucky Hospital Association that was released Friday at a news conference in Lexington.
"The bottom line," the report states, is that "Kentucky hospitals will have higher losses and lower operating margins, with a projected net loss of $1 billion from 2014 to 2020."
Rural hospitals, according to the KHA report, will be hit especially hard. State Auditor Adam Edelen recently found that 34 percent of rural hospitals, where an average of 72 percent of patients are covered by Medicaid or Medicare, were considered to be in poor financial health.
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The KHA report said that 70 of the state's 109 hospitals have laid off a total of 7,700 employees in the past two years. That's about a 10 percent reduction of hospital workers.
The biggest impacts on a hospital's financial health, according to KHA board chairman Dennis B. Johnson, come from quality measures created by the Affordable Care Act.
Under the ACA, hospitals with a high number of patients who come back to the hospital for treatment within 30 days will have their federal payments cut by 3 percent.
This, Johnson said, places an undue burden on all hospitals, but especially small, rural hospitals.
According to the Center for Medicare and Medicaid Services, which oversee the readmission program, the ACA policy resulted in 130,000 fewer hospital readmissions between 2012 and 2013.
Kentucky health officials have proudly touted the finding that the portion of uninsured Kentuckians has dropped from 20 percent to 11 percent since ACA enrollment began in 2013.
But, KHA president Michael Rust said, the influx of patients doesn't offset potential loss of penalties and other changes in how hospitals are paid for care.
Kevin Halter, chief executive officer of Bon Secours Kentucky Health System, said most hospitals operate at a profit margin of about a 1 percent to 2 percent. That isn't likely to improve any time soon, he said.
Also, the ACA was supposed to reduce expensive emergency room visits for non-emergency care. He said that hasn't happened.
Friday's report was the beginning of what will be a continued look at the financial condition of Kentucky hospitals, Rust said.