Becker's ASC Review

20 HEALTHCARE NEWS 20 One Big Beautiful Bill Act fallout: Health system CEOs brace for change By Laura Dyrda A er President Donald Trump signed the One Big Beautiful Bill Act July 4, health systems are calculating the potential effects of the new law and preparing new strategies accordingly. e legislation includes a variety of provisions aimed at improving efficiencies and reducing fraud. Among the most scrutinized aspects is its changes to Medicaid; the bill adds work requirements, more frequent redeterminations, and adds new limits on state-directed Medicaid managed care payments and oversight. e Congressional Budget Office estimates 11.8 million people will likely lose Medicaid coverage as a result. But that's not the only part of the bill keeping health system CEOs awake at night. It also restricts ACA premium tax credit eligibility and phases out enhanced federal medical assistance percentage incentives connected to provider taxes. What does this mean for health system executives and how are they planning for the future? One day at a time. e "polycrisis" Health system size, geography, patient population and financial stability will influence how impactful the new law will be. Renton, Wash.-based Providence, a 51-hospital system sprawling multiple states, estimates the bill will have an up to $500 million annual impact on the system. e system is also analyzing specifics of the bill to prepare for "material reductions in reimbursement," said Erik Wexler, president and CEO. "e passage of H.R. 1 by Congress poses a significant threat to the health and well- being of our communities, placing essential health programs and services at risk while stripping access to health care for millions of Americans," Mr. Wexler said. "Eliminating nearly $1 trillion from Medicaid and the ACA marketplace funding over the next decade will impact every American. ese sweeping reductions will limit health services; lead to care delays and longer wait times, especially in emergency departments; and place undue strain on overburdened healthcare providers." Providence, like many health systems, is already feeling significant pressure from external forces including state wage laws, staffing shortages, tariffs, inflation and commercial payer delayed payments and denials. Mr. Wexler calls it a "polycrisis" as the issues keep piling up. "We will not be able to completely mitigate the access to care impacts, nor will healthcare across the U.S.," said Mr. Wexler. "Preparations for the possibility of this legislation have been underway since January and have already painfully reduced our staff by over 600 people, have begun to reduce programs and services where required, and are increasing pressure on the commercial payers to meet contractual obligations." Smaller systems and rural healthcare organizations are feeling a similar pinch. David Dunkle, MD, president and CEO of Franklin, Ind.-based Johnson Memorial Health, said the bill's passage is further pressuring hospitals and systems to "control expenses, increase efficiencies and maximize profitable service line performance." "e passage of the One Big, Beautiful Bill — when added to present concerns such as wage inflation, increased supply costs, labor shortages, and an ever-increasing number of commercial payor denials — will be the final straw that results in more hospitals shutting their doors in the coming months," he said. Tom Vasko, CEO of Newman Memorial Hospital in Shattuck, Okla., said the bill will further challenge his 25-bed critical access hospital. e bill eliminates the directed payment program, which helps keep hospitals open in the state, where 97 hospitals have negative operating margins. e cuts may mean hospitals cut services including maternity care and cancer services, as well as increased costs. "Newman, as a critical access hospital, every Medicare patient we treat we lose money on. We will now be able to say the same for Medicaid," said Mr. Vasko. "In other words, our congressional policy for our most critical hospitals is you must lose money on all federal and state covered patients." Mr. Vasko took the helm three years ago and knew he needed to make big changes; he decided to take a "for profit approach with a nonprofit mindset." "is novel approach would position the organization for resistance, strain and ward off closure," said Mr. Vasko. "Given the circumstances, we will become more aggressive with a sense of urgency, accuracy and competitiveness. Newman will continue to be progressive. We must continue to gain top line revenue creating an opportunity for higher levels of cash flow to remain liquid." e hospital is also leaning into its analytics and AI partner Benzait, a boutique tech firm, and primary care providers to identify patients who need a higher level of specialty care. "In the last four months, Newman has created a model of partnership and forged deep provider relationships to gain a strong referral base and ancillary revenue," said Mr. Vasko. "We've added the opportunity to gain an uptick of 24,000 patient visits annually. We've launched two additional primary care clinics and a specialty clinic in contiguous counties to capture the patient base and legitimize our presence and geographic footprint. Investment in brand and creating an omnichannel of advertising to enhance patient recruitment." Medicaid cuts e Medicaid cuts add to financial strain for already cash-strapped hospitals and systems, particularly for rural health systems responsible for a high percentage of patients with government payers. "In the short term, I expect the amount of charity care that we provide to increase significantly as individuals lose their Medicaid eligibility," said Dr. Dunkle. "In the long term, I worry about how the reduction in state-directed payments will affect Medicaid reimbursement, which already fails to cover the cost of providing care to the covered individuals." David Lubarsky, MD, president and CEO of WMCHealth in Valhalla, N.Y., expects big ramifications from the Medicaid cuts, particularly for children. Children who depend on Supplemental Nutrition Assistance Program benefits or rely on their parents to navigate the new work requirements will be adversely affected. "ese 'cuts' to Medicaid will not save money for our society at large," Dr. Lubarsky said. "We are the safety-net system across 6,200 square miles of the Hudson Valley. e disenrolled will end up at the doors of

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