The Affordable Care Act and Grady Hospital

Atlanta Metropolitan Market
The Atlanta Metropolitan market for healthcare services is dominated by nonprofit healthcare systems, including the academic medical system Emory Healthcare. Emory became the largest healthcare system in the market after its acquisition of St. Joseph’s Hospital of Atlanta. It is expected that the consolidation of healthcare systems will continue as healthcare reform and market forces make it difficult for smaller hospitals to remain independent. The 28 county Atlanta market has 43 acute-care hospitals with an estimated 459,909 inpatient discharges annually and 9,796 total acute-care beds. The average daily occupancy rate is 64 percent, and the average length of stay is 4.9 days (A Decision Resources Group Company, 2012).
Grady as a Public Hospital Grady Health System operates Grady Memorial Hospital which is Atlanta’s public safety net hospital. Grady currently serves 7 % of the Atlanta market and Grady’s market share is 22 % Medicaid and 22 % self pay or uninsured. After the implementation of the ACA, one would assume that Grady will continue to serve 22% of Medicaid patients and 22% of the uninsured. Grady will continue to be Atlanta’s safety net hospital after the full implementation of the ACA (A Decision Resources Group Company, 2012).
Grady has the only Level I Trauma center in the region and the state’s only poison center. Grady Memorial Hospital offers extensive medical care that other area hospitals do not offer; such as: The Diabetes Detection & Control Center, Georgia Cancer Center for Excellence, Comprehensive Sickle Cell Center, Marcus Stroke and Neuroscience Center, the Avon foundation Comprehensive Breast Center, Perinatal Center, Neonatal Intensive Care unit and a Primary Care Center. Grady’s infectious Disease Program is one of the top three HIV/AIDS outpatient clinics in the country (A Decision Resources Group Company, 2012). Grady Memorial Hospital provides a positive externality in the form of a public good. Grady offers care to indigent people who would be not be able to access care, and in many cases may be denied care. Grady Health System manages 600,000 patient visits per year, and the majority of Grady’s revenue is generated through Medicare and Medicaid reimbursement. In 2010 Grady provided $220 million in indigent and charity care. Grady Hospital is a necessary public good because of the specialized services they provide and the amount of indigent care they supply to the communities in which they serve (www.gradyhealthsystem.org). In addition to these services, Grady is also a valuable teaching hospital. Grady is an internationally recognized teaching hospital and they are exclusively staffed by doctors from Emory University and Morehouse schools of medicine. Twenty-five percent of doctors that practice in Georgia received some or all of their training at Grady (Gradyhealth.org).
Cost Benefit Analysis for Safety Net Hospital and Specialty Services The cost to the taxpayers for having a safety net hospital that provides specialty services is higher taxes. Georgians have already seen an increase in their payroll taxes and their take-home salary has decreased in January 2013. After the implementation of the ACA it is expected that the amount of taxes people pay will continue to increase. Governor Nathan Deal rejected the Medicaid expansion. However, Governor Deal states that in Fiscal Years 2013 and 2014 Medicaid and SCHIP funding will be the second largest portion of the state funds budget; with 13 cents of every dollar going to one of these programs. Without Medicaid expansion the ACA is expected to add more than 100,000 new people to Georgia’s Medicaid Program. Georgians qualify for Medicaid under the current system but have not enrolled into the program. With the individual mandate requiring either insurance or a tax, people are likely to enroll in the current Medicaid system, this financial burden of enrolling this many people will fall on the state of Georgia and its taxpayers (Atlanta Journal Constitution, 2013). The benefit for taxpayers to have a safety net hospital that provides specialty services is that it will provide a social benefit. People without insurance will still receive care, regardless of their ability to pay. They will also be able to seek treatment and immunizations. Therefore, this care will keep communities healthier. Grady also provides many specialty services to the 28 county service area; such as level 1 trauma center, burn center, and other specialty services that only Grady delivers.
The cost to providers will depend on the healthcare system and percentage of money they will get from the “bed tax”. The state charges hospitals 1.45% of net patient revenue to help pay for Medicaid. Trauma centers pay 1.4%. That money will allow the state to draw federal matching dollars. These dollars are redistributed to hospitals based on Medicaid services they provide. Some providers will receive more money than they paid, like Grady; and others will pay in more than they get back, which will result in a net loss for the “bed tax” (The Atlanta Journal Constitution, 2013).
The benefit to these providers is that hospitals like Grady will continue to absorb these Medicaid patients; and their percentage of Medicaid patients will remain lower than hospitals like Grady. They will have a more balanced payer mix of privately insured and employee insured; which has a higher reimbursement rate.
The cost of these services to healthcare consumers is that the newly insured will be more likely to seek care. This may decrease access and may affect all healthcare consumers.
The benefit for the healthcare consumer is that there will be free medical care to low income families and the unemployed. There will be free preventative care, and improved quality of service through the value-based purchasing initiative.
Cost Benefit Analysis on Education Services
Grady is a teaching hospital and many physicians are trained at Grady. If the Atlanta area did not have Grady to train physicians, there would be a decrease of physicians in Georgia.
The cost of the educational services to the taxpayer will be that their taxes will support federal funded programs such as: Graduate Medical Education (GME), scholarships, loan repayment, and retention grants to increase workforce supply and support training of healthcare professionals (A Decision Resources Group Company, 2012).
The benefit for the taxpayer is that there will be an increased supply of physicians, mid-level providers, and nurses through these federally funded programs.
The benefit is that 25% of Grady’s resident physicians stay and practice in Georgia. All healthcare providers benefit from the education and training that Grady provides and will likely employ physicians trained at Grady.
The cost to the consumer will be seen in 2020 when there will be physician shortage of 2,500 doctors which may reduce access to care.
The benefit to consumers is that their federal funds will give a 10% bonus payment to physicians that practice primary care to incentivize going into family practice. This incentive should increase the amount of physicians and decrease the physician shortage.
Summary
The ACA will present both opportunities and significant challenges for safety net hospitals; because it is a system of healthcare providers that primarily serve patients that cannot afford or gain access to care. The ACA will extend health insurance coverage to uninsured people in Georgia. One could assume with more people insured, safety net hospitals will be more profitable. However, safety net providers are concerned that changes in the ACA regarding healthcare financing may affect the availability of adequate and sustainable funding as they continue to care for the most vulnerable consumers (Summer, 2011). One could assume that Grady will still serve 22% of people who do not have insurance. Some of the uninsured will be exempt from the individual mandate. Others may decide not to purchase insurance through an exchange and choose to pay the penalty. Undocumented immigrants will remain uninsured, and people may have gaps in coverage leaving them without insurance (Summer, 2011). Safety net providers have been partially subsidized by Medicaid payments, grants, and the Medicaid Disproportionate Share Hospital (DSH) program. Safety net hospitals will still provide uncompensated care but without subsidies to finance their hospital system Summer, 2011). Safety net providers play an important role in the development of the healthcare workforce, and will continue to play a critical role in training the next generation of healthcare providers; as well as the services they provide. The ACA will have to ensure that these safety net hospitals are financially sound, because they play an important role in the surrounding communities through their services, physician education and training. Atlanta could not afford to lose Grady’s services or its role as a safety net hospital (Summer, 2011).

References
A Decision Resources Group Company. (2012). Market Overview Atlanta. Nashville, TN: HealthLeaders-Interstudy.
Hospital tax plugs hole for now. (2013, February 14). Atlanta Journal Constitution.
National Association of Urban Hospitals. (2012). The Potential Impact of the Affordable Care Act on Urban Safety Net Hospitals.
Summer, L. (2011). The impact of the Affordable Care Act on the safety net. Academy Health. Retrieved from www.academyhealth.org www.gradyhealth.org. www.gradyhealthsystem.org