ObamaCare Will More than Double Profit Margins for Hospitals’ Emergency Departments

Think ObamaCare is all bad news for hospitals? Not according to a new study:

Physician and Nurse Pushing GurneyWe estimated that hospital revenue from ED care exceeded costs for that care by $6.1 billion in 2009, representing a profit margin of 7.8 percent (net revenue expressed as a percentage of total revenue). However, this is primarily because hospitals make enough profit on the privately insured ($17 billion) to cover underpayment from all other payer groups, such as Medicare, Medicaid, and unreimbursed care. Assuming current payer reimbursement rates, ACA reforms could result in an additional 4.4-percentage-point increase in profit margins for hospital-based EDs compared to what could be the case without the reforms.

(Michael Wilson & David Cutler, Health Affairs)

Comments (10)

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  1. Matthew says:

    It will double profit margins because that’s where people will go to get their health care.

    • Thomas says:

      Perhaps the same reason why ER waits are going to increase. More people will go, profits will increase.

      • Walter Q. says:

        Well profits will increase as long as ERs get adequate compensation from what the expanded Medicaid will reimburse them

    • Anne says:

      Uninsured people have always used the ER as primary care, because ERs have to see you, so that’s nothing new.

  2. Bill B. says:

    “Think ObamaCare is all bad news for hospitals?”

    It won’t necessarily be bad news for hospitals, but it will be bad news for patients.

    • Buddy says:

      Especially as waits increase to see a primary care doctor, or even urgent care doctors. Hospitals see you right away and will write the script for antibiotics or what have you.

  3. Linda Gorman says:

    The fact that ERs do make a profit probably explains why entrepreneurs are opening free-standing emergency rooms that are not associated with hospitals and compete with them by providing better service in areas not well served by hospital emergency rooms.