Asking Hospitals to Improve Quality Despite Medicare Cuts

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Research now suggests that the savings the Affordable Care Act creates by revising the government payment to Medicare may also bring some harm to patients. Hospitals respond to reductions in revenues by reducing staff, according to many research studies. According to a study published in 2013 in Health Services research, reductions in Medicare payments between 1996 and 2009 were primarily offset by cuts to operating expenses. These cuts were predominantly personnel.

These kinds of cuts can lead to a decreased quality of care that the patient receives. A recent study on the length of a patients stay shows that cutting the length of stays increases the mortality rates in patients after a heart attack or with pneumonia. Another study published in Health Economics suggests that in financial distress mortality rates increase.

The Affordable Care Act takes a large cut from Medicare payments for beneficiaries to hospitals, an estimated 1.1 percent cut each year. In 2010, the Medicare actuaries estimated that this would cut $113 billion from the program from 2010 to 2019, accounting for 20 percent of the net savings from Medicare included in the Affordable Care Act.

Hospitals are continually being asked to do more with less. Historically, from 1990 to 2005, hospitals were never near 1.1% growth, usually hovering around 0.5%. However, an optimist would like to believe that with the coming of EHR and new payment models, and a new emphasis on quality will keep hospitals improving care in lieu of the reduced revenues.

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