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A Releases New Report Highlighting Significant

Financial Challenges Facing Hospitals and Health

Systems That Are Jeopardizing Access to Care

AHA, hospital leaders to discuss report during national media briefing today; please

share your organization’s story about challenges you are facing and why additional

federal support is needed to ensure access to essential services for patients

A new analysis prepared by Kaufman, Hall & Associates, LLC and released today by

the AHA shows that hospitals and health systems continue to face intense pressure on

staff and resources while also dealing with rising expenses for supplies, drugs and

equipment, as well as for the workforce. Left unaddressed, these financial challenges

have the potential to jeopardize access to essential health care services for patients.

The trends are expected to continue through 2022, with losses in the billions of dollars

for hospitals and health systems, resulting in the most financially difficult year for the

field since the beginning of the COVID-19 pandemic in early 2020 and threats to access

to care and services.

The first half of 2022 has severely tested hospitals and health systems due to the

impacts of COVID-19 surges, increased expenses and a lack of COVID-19 relief

funding for some of the hardest impacts of the pandemic, including the Delta and

Omicron surges. As a result, even the most optimistic projections for the entirety of

2022 indicate margins will be down 37% compared to pre-pandemic levels, with more

than half of hospitals operating in the red, according to the report. Under a pessimistic

scenario for the rest of 2022, margins could be down as much as 133% compared to

pre-pandemic levels, with over two-thirds of hospitals operating in the red.

“While federal support and relief has tapered off, the fight against COVID hasn’t,” said

AHA President and CEO Rick Pollack. “Managing the aftermath of the pandemic has

placed the vast majority of America’s hospitals in serious financial jeopardy as they

experience severe workforce shortages, broken supply chains, the Medicare 2%

sequester kicking back in and rapid inflation that has increased the cost of caring.

These realities translate into access to services being put in jeopardy. This deserves the

immediate attention of policymakers at every level of government to ensure we are able

to keep people healthy and maintain essential public services that our communities

depend on. America simply can’t be strong without its hospitals being strong.”

MEDIA BRIEFING ON THE REPORT

The AHA this morning is hosting a media briefing to share the report’s findings and

provide perspective from the front lines. Michael Slubowski, president and CEO of

© 2022 American Hospital Association | www.aha.orgTrinity Health based in Michigan, Jack Lynch, president and CEO of Main Line Health in

Pennsylvania, and Peggy Abbott, CEO of Ouachita County Medical Center in Arkansas,

will share with reporters how these challenges are jeopardizing access to care for the

patients and communities they serve.

In addition, during the briefing, Pollack and the three hospital leaders will discuss

actions that Congress can take to support the field, including: extending or making

permanent programs that provide support to rural hospitals; holding commercial health

plans accountable for their behaviors that put further financial strain on hospitals and

exacerbate workforce pressures; making waivers permanent, including flexibilities for

telehealth and hospital-at-home programs that have led to improvements in care; and

stopping additional Medicare cuts to providers. See our advocacy fact sheet for more

details, and watch AHA Today for additional coverage from the briefing.

ADDITIONAL AHA REPORTS HIGHLIGHT FINANCIAL CHALLENGES

Today’s report is the latest in a series of reports the AHA has released during the last

few months highlighting the difficult challenges hospitals and health systems are facing.

These include:

A report released last week on the record number of rural hospital closures in

2020 as well as the financial and workforce challenges those hospitals face.

A report last month on how deferred care during the pandemic has led to

increased patient acuity in America’s hospitals.

A report from the spring that examined the tremendous growth in a variety of

input costs for hospitals and health systems, including expenses for workforce,

drugs, supplies and equipment, as well as the impact of skyrocketing economy-

wide inflation.

SHARING YOUR STORY TO MAKE THE CASE FOR ADDITIONAL SUPPORT

During the next few weeks, we will continue amplifying with policymakers the challenges

hospitals and health systems are facing and why additional support is necessary. We’ll

also be rolling out additional resources to help you tell your story to your lawmakers and

communities. As part of those efforts, we are recording short videos with hospital

leaders, trustees and community members about the challenges they are facing and the

need to ensure hospitals and health systems are strong so they can keep people

healthy and maintain essential public services that communities depend on. If you

and/or members of your board and community are interested in participating,

please contact Jennifer Armstrong Gay at [email protected] or you can

sign up for a filming date and time directly here.

FURTHER QUESTIONS

If you have further questions, please contact AHA at 800-424-4301.

© 2022 American Hospital Association | www.aha.org 

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EXPLAINER

FEBRUARY 7, 2023

Value-Based Care: What It Is, and Why It’s Needed

TOPLINES

· Value-based care, which ties the amount health care providers earn to the results of the care they deliver to patients, could correct the misaligned incentives of the U.S. fee-for-service system

· By 2030, the Centers for Medicare and Medicaid Services aims to have all Medicare beneficiaries and most Medicaid beneficiaries enrolled in accountable, value-based care programs

AUTHORS

Corinne Lewis ,  Celli Horstman , David Blumenthal ,  Melinda K. Abrams

RELATED CONTENT

· Designing Accountable Care: Lessons from CMS Accountable Care Organizations

· Paying Differently for Primary Care for Better Health and Greater Equity

· Making Health Care Accountable

What is value-based care?

Value-based care ties the amount health care providers earn for their services to the results they deliver for their patients, such as the quality, equity, and cost of care. Through financial incentives and other methods, value-based care programs aim to hold providers more accountable for improving patient outcomes while also giving them greater flexibility to deliver the right care at the right time.

Why is value-based care being tested in the U.S.?

Even though the United States spends much more of its gross domestic product on health care than other countries, it’s  not getting the best results . Compared with other high-income countries, the U.S. has the  highest rate of infant deaths  as well as the highest rate of preventable deaths. And a history of inequality in access to care has meant that people of color and individuals with low income are  more likely to experience adverse health outcomes  than the rest of the population.

Experts agree that these longstanding, widespread problems stem in part from the misaligned incentives built into the nation’s traditional, fee-for-service payment model. Under fee-for-service, health care providers like physicians and hospitals are paid for each service they provide. In other words, they are rewarded for volume — they are paid more if they deliver more services, even if they don’t achieve desired results. Value-based care programs aim to change that dynamic, so physicians earn more for delivering health care that helps patients get better, while also keeping costs down.

What is the potential benefit of value-based care?

To better understand the potential benefits of value-based care, stakeholders in the public and private sectors have tested a variety of approaches. The Centers for Medicare and Medicaid Services (CMS) has taken a leading role, testing several voluntary and mandatory programs with hospitals, physician groups, health plans, and other health care entities. One example is the voluntary Medicare Shared Savings Program, which allows providers to form groups called  accountable care organizations  (ACOs). ACOs can earn financial rewards by taking responsibility for caring for a defined group of Medicare beneficiaries and improving the care they receive, largely through better coordination of services. CMS also has tested whether an  “episode-based” payment system  — in which providers receive a single payment for all the services needed to care for a specific medical issue — can produce savings while maintaining quality of treatment.

Studies of value-based care programs  so far suggest that they can reduce costs and improve quality of care, although results have often been mixed and impact modest. Some programs also enable providers to transform the way they deliver care, by promoting collaboration across care teams and encouraging providers to spend more time on services that wouldn’t normally be covered under fee-for-service%

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