An article was recently released in DOTmed. What the article doesn’t articulate is if the state hasn’t expanded Medicare/Medicaid to include a larger population then the rural healthcare won’t have the number of available patients that will pay their bills. Those patients that aren’t part of the expansion would therefore be reliant upon private insurers or self pay (cash) for medical services. That fact makes both unlikely as they’re living in a rural, less expensive areas and cannot cost justify private insurance premiums or cash out of pocket for the care they need.  

 If these patients can’t afford cash or private insurance they tend to delay getting check ups and general medical services to maintain their well being and self manage with OTC remedies.  Subsequently, these forgotten patients only show up when they are critical and the cost of care to get them back to health is expensive usually resulting in a “bad pay” situation for the hospital resulting in negative cash flows and write offs.  All of which effect financial performance of the healthcare provider.

1.  Let’s dig a bit deeper however. According to a recent Forbes article 1 in 4 Rural Health facilities will likely close. Not having Medicare/Medicaid expansion means a smaller paying populous for hospital services.  The states that haven’t expanded Medicare/Medicaid may not be able to afford the cost of doing so - low tax base and can’t balance the budget.  Their shortsightedness isn’t looking for new revenue generation. If they were they could afford the expansion. The eventual cost of not expanding medicare/medicaid are the hospitals closure and a forgotten populous whom needs care. All of this leads to unfavorable rankings for states for doing business and having new younger people move into the rural/suburban/metropolitan areas…. It’s a viscous circle, “if this then that” scenarios, but States need to get this right in order to attract new life to build a tax base, and corporate support, etc. Growth happens when business is supported favorably. Healthcare is an important attribute to any states ability to attract new business and new people.

2. Couple these facts with an aging infrastructure, inability to add new service lines, recruit physicians, recruit staffing, change their service care delivery models, ineffective fundraising, ineffective M&A or partnerships, etc. will be the recipe for the closures of this magnitude.

3. Obamacare (Patient Protection and Affordable Care Act) was created and intended to be the paradigm shift which could have been the catalyst for change; Reduce the cost of healthcare, Improve patient care, Open healthcare’s borders to all of Americans. Instead there are those healthcare providers that embrace population health management and those that do not creating the have and have not’s.  This shift in healthcare delivery models is a land grab designed to control a populous’s care, and drive up the DRG’s with CMS - basically not saving CMS any money. Reimbursement reductions make little difference and the way around this is to control a populous’ care. This is a 30,000ft perspective and it goes much deeper still into what ails Obamacare.

4. The Dems want socialized medicine or a single payor system. Healthcare is the second largest employer in the US, the federal government the largest.  If a single payor system is adopted the feds have complete control over the populous. Choice, and innovation are stymied. Unemployment will soar to 22+%.  Simply look at the VA health system and that’s what we would get.

5. The Republicans want to demolish Obamacare and go back to free markets. This will create a cacophony of events that will bankrupt Medicare as costs spiral out of control and drive inflation.

 From an economists perspective neither scenario plays out well in the economy.  From a Centrists perspective - Fix what needs to be fixed in Obamacare!