Becker's Hospital Review

9 2015 YEAR REVIEW in FINANCE PERSPECTIVE yet seem to be getting better coverage. Another net loser under the ACA is arguably the U.S. taxpayer and the U.S. investor who rely in part on investment income — these parties largely pay the added ACA taxes. In looking at who are winners and losers, it is not at all clear that those deemed winners and losers today will be the winners and losers five years or 50 years from now. us, these categori- zations are subject to change. Six winners Some of the big winners under the ACA are as follows: 1. President Barack Obama. We think it is hard not to think of President Obama ultimately as a winner at the time under the law's mandates. While the law won't have the far reaching impli- cations that the Social Security Act had, which was passed under former President Franklin D. Roosevelt, or the Medicare pro- gram that was passed under former President Lyndon B. John- son, it seems as though the ACA will have a significant impact. As a signature piece of legislation that oen — for good or bad — is called Obamacare, we think we have to overall deem President Obama a winner thus far. Given that the longevity of the act is not yet clear, and the polarization it has caused, the jury remains out on this. e near-term flipside to calling President Obama a winner is to point out that under the Obama presidency, the Democrats have lost 69 house seats, 12 governorships and 13 senate seats. Further, as costs add up for the ACA and healthcare costs do not come down, the long-term prognosis is not yet clear. 2. Large health systems. As the government moves more to- ward plans that favor those that are large enough and complex enough to handle large amounts of risk, the large health sys- tems, which are consolidating significantly, are winners under the ACA. Further, regional systems that have dominance in their market also seem to be winners under the ACA. 3. Large pharmaceutical companies and device compa- nies. Notwithstanding the device tax and all the pressure on pharmaceutical companies, the profits of the device companies and the pharmaceutical companies seem to be holding up fine. Further, the increase in people being added to the insurance rolls seems so far to offset the additional costs and taxes paid by such companies as well as the efforts to reduce costs. 4. Investment bankers. e onslaught of the ACA has led to a huge wave of consolidation amongst healthcare companies, hos- pitals and health systems and payers. In each one of these deals, there are investment bankers and consultants that are earning huge fees. us, net-net we view them as winners under the ACA. 5. Large health IT companies. e companies that have been the leaders in the EMR effort, such as Epic and Cerner, are huge winners under the ACA. Everybody needs an EMR and the amount spent on these systems is enormous, with the biggest companies receiving the lion's share of these dollars. 6. Large insurance companies. It is unclear whether to put the large insurance companies in the winner or neutral category. On one hand, consolidation has made the remaining companies more powerful. At the same time, as large health systems have consolidated their own position of strength, the payer's power has somewhat declined as some of those providers have become stronger and the balance of power has shied to some of the larg- er provider chains. Seven Losers Some of the big losers under the ACA are as follows: 7. Smaller community hospitals. Here, we consistently see both small community hospitals and rural hospitals being bought up by larger hospitals and health systems. Such smaller hospitals don't seem to have the clout or finances to compete for physi- cians, technology or to provide a plan or a needed element that is critical for larger payers and larger risk-sharing efforts. is does not mean that some small or innovative companies won't thrive. 8. Smaller practices. As the complexity of the business of med- icine has changed, it is harder and harder for smaller practices to remain independent (and needed by payers) in the new world order under the ACA. 9. Smaller companies that sell into health systems. As there is greater consolidation amongst large companies and hos- pitals and health systems, smaller companies have a harder time selling into companies that require scale. In contrast, when there were 5,500 to 6,000 different independent hospitals and thou- sands of independent companies, it was easier for those parties to find customers albeit even if they are not as large of companies and systems. 10. e FTC. e Federal Trade Commission, which was sup- posed to police monopolization and providers, can arguably be viewed as a loser under the ACA. It has seen system aer system merge together and gain market power while the FTC has had little authority to change or stop them. Here, it has not been es- sentially brow beaten by the federal government and the Obama administration, but it seems close to this. 11. Taxpayers. e costs of the ACA are largely borne by tax- payers in several different ways. e cost of the ACA is currently estimated at a net cost of $1.207 trillion dollars by 2025. Four of the most discussed provisions are increased tax rates, taxes on investment income, the individual mandate and the Cadillac tax. 12. Physicians and the AMA. We view physicians as net los- ers as more and more efforts are made to take the everyday phy- sician out of the driver's seat in healthcare. More and more, many big systems and companies would seemingly like physicians to be a "cog in the machine"

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