February 24, 2024

– The US government could run out of money within the next month if lawmakers don’t agree to raise or suspend the country’s debt limit. This economic catastrophe could leave the US without funds to pay bills, and health care providers could find themselves in a similar position this summer.

Healthcare is not immune to the impact of debt ceiling issues, according to David T. Francis, managing director of the BDO Center for Healthcare Excellence & Innovation.

One obvious impact of the debt ceiling on health care is repayment. Healthcare providers who accept Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) rely on the government to pay for those beneficiaries’ care. Repayment by these public payers could dry up if the government cannot pay its debt due to the debt ceiling.

Without these reimbursements, providers who treat multiple Medicare and Medicaid beneficiaries and those already financially distressed, including rural hospitals, are in jeopardy. Medicare is a $900.8 billion program and growing, according to the National Health Expenditures (NHE) report. Medicaid spending is also growing just as fast, with the latest data revealing a 9.2% increase to $734.0 billion.

Debt ceiling issues won’t affect commercial payers as much, Francis explained RevCycle Intelligence. However, many commercial payers also provide coverage for Medicare and Medicaid beneficiaries, including in the rapidly growing Medicare Advantage space.

“You may see some restrictions on the payment and administrative side of the care,” Francis said. “These are big stuff right out of the gate.”

However, Francis pointed to a more significant problem with the current debt ceiling issue.

“A major concern would be the social impact and, therefore, patient reactions,” Francis said. “When confronted with the idea of ​​an insurance loss or higher out-of-pocket health care costs, they may skip treatment.”

The healthcare sector has seen a similar reaction during the COVID-19 pandemic. Healthcare organizations saw patient volumes halve at the start of the pandemic in 2020. Those volumes only just recovered three years later.

Delaying treatment can lead to more severely ill patients or, worse, higher mortality rates. As a result, this behavior can increase medical bills, according to Francis.

Lawmakers are busy negotiating a deal to prevent a breach of the debt ceiling. Moody’s, a global integrated risk assessment firm, estimates only a 10% chance of a breach. However, investors are starting to take notice of the rapidly approaching Date X, the so-called date when the Treasury will run out of cash to pay government bills on time. That date is likely June 8, according to Moody’s latest debt ceiling analysis.

Healthcare professionals are getting anxious as the X-date approaches. This is another economic challenge after three long years of financial turmoil. Francis advised healthcare leaders to rethink traditional cost-optimization strategies to ease financial pressures from rising spending and a tumultuous economic environment.

“I will often encounter this willingness to let staff fix problems, and the reason it doesn’t work anymore is the cost,” Francis explained.

Healthcare organizations are facing shortages of almost every type of doctor, with some markets also experiencing shortages of administrative staff. Traditional methods of cost optimization and reduction cannot work in this type of job market. Technology that streamlines workflows and increases access to physicians, even if they aren’t in the same room as a patient, can help healthcare providers overcome their biggest workforce and cost reduction challenges.

Technology is also key to “being more innovative and creative” in how providers deliver care, which Francis says is essential to the long-term financial stability of healthcare organizations. Not only do patients have more skin in the game when it comes to medical bills due to high-deductible health plans, they’re also more selective about where they spend their money due to the economy.

Healthcare organizations should leverage technology such as self-service platforms at the front end of the healthcare experience to become more patient-centric without having to add more staff. But organizations will need to look inward to identify the right technology for their patients and staff; every organization will have different needs.

Francis recommended a new approach where more people are involved in the decision making process. Healthcare organizations should no longer have a top-down approach, Francis said. Instead, leaders should gather feedback from staff across the organization to identify workflow improvements that can elevate care delivery. Leaders may also want to leverage insights from community organizations that work with their patient populations and understand some of their needs.

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