Vital Signs
In picking healthcare reform’s so-called winners and losers, the hospital sector is typically at the top of the winners list. The logic goes that, by providing insurance coverage to 32 million more Americans, hospitals will have more paying patients and fewer whose healthcare bills end up as bad debt.
 
But because many of the coverage mandates of the Patient Protection and Affordable Care Act don’t kick in for a few years, and jobs are still scarce, you’d think many of the publicly-traded players would be seeing more self-pay patients in the meantime — and holding their breath for 2014.
 
Yet, that hasn’t been the case. The publicly traded for-profits — including locals Community Health Systems and LifePoint Hospitals — saw a collective increase in self-pay admissions of only 0.3 percent in the first quarter of 2010.
 
So where are all the uninsured patients going? Investment banking firm Avondale Partners suggests they’re visiting Federally Qualified Health Clinics (FQHCs), who are “playing an important, but under-appreciated, role in serving uninsured patients who would otherwise seek care in emergency rooms.”
 
FQHCs are nonprofit clinics that offer primary care — medical, dental, mental and prenatal — in underserved areas. An Avondale survey of FQHCs located near hospital companies’ acute care facilities found the clinics had a 14 percent increase in patient visits last year, “well in excess of hospital volumes,” which were flat to down.
 
That’s no accident. Many hospital companies are working with the clinics in their communities to divert patients from the expensive ER setting to a more appropriate primary-care environment. Avondale pointed to Health Management Associates, which has a “corporate strategy” and protocols for getting non-emergency cases to FQHCs. And Vanguard Health Systems mentioned on its most recent quarterly conference call that it’s working with the FQHCs in its markets to help combat the high self-pay volume it has experienced of late.
 
Look for this trend to continue in coming years. FQHCs will get $11 billion in new federal funding over the next five years and hospital companies are likely to become ever more inwardly focused as they come to grips with an economy that’s likely to remain less than buoyant.