Reimbursement cuts set to slice capital spending growth rate in 2013

Growth in health system capital spending in 2013 is projected to dip below 2010 levels as reimbursements continue to be cut, according to a recent Premier healthcare alliance survey of healthcare executives.

In its fall 2012 Economic Outlook, Premier reports that 74 percent of the 617 survey respondents – primarily hospital C-suite and materials and practice area managers – indicated the largest factor motivating reduced spending growth is reimbursement cuts.

“Providers have already been cut $80 billion over the last three years through changes in federal bad debt requirements, Medicaid DSH cuts and coding cuts. This excludes ACA-related reductions,” said Alven M. Weil, director of public relations and communication at Premier.

Weil notes that the Affordable Care Act creates new challenges to reimbursements for providers.

“[Providers] also face a reduction in payment from Medicare of about $155 billion over 10 years to help fund the expansion of healthcare coverage through the ACA,” he said.

Additionally, sequestration – which includes automatic cuts aimed at trimming Medicare spending by 2 percent over 10 years – poses a threat to hospitals and health systems, said Weil.

“Since hospitals represent about 40 percent of Medicare spending, they stand to lose about $50 billion over this period,” he said.

Other key study findings include:

  • Twenty-four percent of respondents believe their patient admissions will decrease by nearly double what was projected in fall 2011 (12.4 percent).
  • Capital investments in imaging, lab and clinical equipment are forecasted to drop by more than 23 percent compared to just six months ago.
  • When respondents were asked about the area in which they expect to make the largest capital investment over the next year, 43 percent cited healthcare information technology and telecommunications, up from 34 percent in spring 2011, and 34 percent cited capital investments in infrastructure and construction, up from 28 percent in fall 2011, an 18 percent increase.