Modeling the impact of healthcare reform on internal medicine service lines within an academic medical center

Abstract

The Patient Protection and Affordable Care Act will have a dramatic impact on Academic Medical Centers (AMC) across many fronts. The expansion of Medicaid and creation of healthcare exchanges to compete with existing commercial payers will alter the current payer-mix seen at AMC's. While prior studies have analyzed this impact at a hospital level, we evaluated these changes in payer-mix on three distinct internal medicine service lines by modeling out their effect on overall contribution margin (CM) for each service line using actual hospital data collected from a tertiary-care, urban AMC. We performed a sensitivity analysis to account for varying rates of participation in the newly created exchanges using 33, 50, and 100% take-up rates to simulate the unknown migration of current commercial patients to exchanges in addition to a threshold analysis. We found that despite an increase in CM from Medicaid expansion, the negative impact on CM from commercial patients migrating to exchange plans at all three take-up rates caused an overall loss in CM across all three service lines ranging from $215 020 to $1 482 597. Threshold points ranged from 19 to 37% across service lines. Our results reveal that the key drivers to determining the impact on CM is ultimately driven by what exchange rates will be set at as well as how many current commercial patients transition to the newly created exchanges.