ACA may wind up unkind to children's hospitals

With most kids already insured, DSH cuts likely to cut deeper
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The Affordable Care Act (ACA) has been fairly generous to hospitals in terms of creating more insured patients who have a higher likelihood of paying their bills, but pediatric facilities may actually be hit hard by healthcare reform, according to a study published in JAMA Pediatrics.

Researchers concluded that while children's hospitals only represent little more than 3 percent of all acute care facilities, they represent nearly a third of the patients from the poorest households, nearly 34 percent of Medicaid enrollees and more than 40 percent of patients with the most acute medical conditions. They examined 1.17 million discharges of patients younger than 18 years old in 26 states that occurred in 2009.

Despite this unfavorable patient mix, children's hospitals are still facing the same cuts in the Disproportionate Share Hospital program as other facilities. Yet since a larger proportion of children are insured than adults due to the Children's Health Insurance Program, the net benefits of the ACA are far less dramatic for this patient population and the providers serving them.

"Children's hospitals may face disproportionate financial risk from the ACA," the study's authors concluded.

However, many children's hospitals have stronger financial underpinnings than those that treat adult populations. According to a 2012 report from Fitch Ratings, children's hospitals as an aggregate have a credit rating about one point higher than the entire acute care universe.

This financial challenge comes as most experts say building and operating children's hospitals is more complex and expensive than regular acute care facilities. Many require spaces for classrooms, teen lounges, and rooms large enough for entire families to gather and show their support.

To learn more:
- read the study (subscription required)

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