Dive Brief:
- A handful of early Q2 earnings reports suggest that publicly traded hospitals are seeing revenue gains under the Affordable Care Act.
- LifePoint Hospitals posted a 44.3% income gain in Q2 while Universal Health Services (UHS) raised its projected earnings per share by about 15% to $5.55 for the year.
- LifePoint and UHS cited healthcare reform—and particularly Obamacare's Medicaid expansion—as a major reason for recent growth in revenue per adjusted admission and a drop in self-pay patients.
Dive Insight:
Both LifePoint and UHS are raising their annual earnings projections on the strength of their Q2 numbers. According to LifePoint CEO Leif Murphy, the Tennessee-based chain's quarterly revenue per equivalent admission rose 2.5% thanks to an increasing number of insured patients and higher payment rates from contracted insurers. Self-pay patients using LifePoint's hospitals declined by 34% and self-pay E.R. use was down 19% in the second quarter.
The company attributes as much as $13 million—before taxes and other deductions—in higher Q2 earnings to the ACA's insurance expansion and expects that figure to reach as high as $50 million by the end of the year, according to Modern Healthcare. UHS saw similar trends in the second quarter, with a 7.7% rise in revenue per adjusted admission.
However, health systems operating in the 21 states that have rejected Medicaid expansion may experience a drop in revenue and income, particularly in the face of Obamacare's cuts to Disproportionate Share Hospital (DSH) payments. If a clear gap between hospitals' earnings in Medicaid expansion states and non-Medicaid expansion states solidifies in the coming years, expect hospital administrators to push state lawmakers for the Medicaid expansion.