Hospitals Trapped in Love/Hate Relationship with Obamacarehttp://www.fool.com/investing/general/2014/06/08/hospitals-trapped-in-lovehate-relationship-with-ob.aspx Keith Speights
June 8, 2014
Hospitals have arguably been Obamacare's biggest fans since the beginning. The industry's lobbying organization, the American Hospital Association, pushed hard for passage of the Affordable Care Act. During the time between President Obama's signing of the legislation into law and the actual implementation, hospital stocks performed exceptionally well.
Now that we're well into the first year of implementation of the key components of Obamacare, how are hospitals reacting? Plenty are celebrating some victories -- but others are lamenting the effects of health reform. Here's why.
Hospital executives give Obamacare credit for some positive developments. HCA's CFO, William Rutherford, told investors during the company's first-quarter financial update that uninsured admissions dropped by 29% in the four states where HCA operates that expanded Medicaid.
Tenet CEO Trevor Fetter reported that uninsured and charity admissions plunged by 33% in the states that expanded Medicaid. Lifepoint's CFO Leif Murphy claimed an even more impressive statistic: Uninsured admissions fell by an average 26.1% across the board.
Lifepoint appears to be one of the most optimistic about the impact of Obamacare. CEO Bill Carpenter called the legislation "a net positive" for his organization. Around 5% of Lifepoint's EBITDA in 2014 will stem from health reform, according to Murphy.
Maggie Elehwany, vice president of the National Rural Health Association, or NRHA, told The Wall Street Journal that rural hospitals "are in crisis mode". At least 14 rural hospitals closed in the last year -- more than the previous 15 years combined. These organizations are particularly dependent on federal dollars, receiving around 60% of total revenue from the government.
Some hospitals that don't operate in rural settings have also encountered rough times due partially to Obamacare. The Cleveland Clinic, a prominent health-care organization, announced last September budget cuts of up to $300 million. CEO Dr. Toby Cosgrove listed the Affordable Care Act as one of the key factors behind the cuts. Other hospitals across the nation have also slashed jobs, blaming Obamacare in part for their actions.
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