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Trend Watch: Community Hospitals May Be Challenged to Survive Obamacare

By Stewart Gandolf, Chief Executive Officer

sign of impact community hospitalsOn an ordinary day many small- to mid-size community hospitals struggle to compete, remain independent…or even keep their doors open at all. But as provisions and affects of the Affordable Care Act (ACA) continue to rollout, the challenges are increasingly severe.

The closure of three Southern California hospitals may signal a trend in that state, according to the Los Angeles Times. Quoting the Hospital Association of Southern California, “About 40 hospitals in California may close over the next five to 10 years, which would represent nearly 10 percent of the 430 hospitals statewide.” This forecast is “because of the changes brought about by the implementation of Obamacare."

It may be a “painful time for many small to mid-size hospitals that don't have the negotiating clout or resources of larger hospitals or giant health systems,” the Times reports. [Read the Times article here.]

“Health insurers are increasingly excluding certain hospitals and forming smaller networks of medical providers to help contain rising medical costs and give employers and consumers more affordable insurance options. The federal healthcare law also includes new penalties for patient readmissions and other funding cuts.”

The number of Community Hospitals, according to the American Hospital Association data, has declined in the past few years, although the most recently reported year reflected in this chart is 2011. [Source: American Hospital Association Annual Survey data – Number of Community Hospitals, 1991–2011]

It remains to be seen if the recent Southern California hospital closures are the harbinger of a downward trend in that state or throughout the nation. The predictions are not encouraging.

Clearly, many—if not most—small- to mid-size hospitals have wrestled with change for some time, as reflected in our previous post from more than two years ago: Community Hospitals Are Disappearing. Economic and Competitive Headwinds Challenge Independence and Survival.

Lonnie Hirsch

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