Restructure Medicare & Medicaid: Economic Factors— Reimbursement Reform Is Easier Said than Done Owing to Political Sensitivity... Percentage Contribution to Medicare Medical Cost Growth Rate . Key | ; by Spending Type, 2019E a Nursing Home & Home Health Hospital 7 Consumers understandably do not Care like constraints on their care All Oth j er 9.3% location. 9.9% - Doctors, nurses and hospitals are . (v] mina <p fulfilling a difficult task at the core of aa 44.5% the healthcare delivery system. a a - Care providers are very important Rx Drugs re to local communities. - Local hospitals are large employers. — - Many hospitals are struggling & Clinical financially. Services KP Source: Data per CMS’ National Health Expenditure database, Doug Simpson, Morgan Stanley Healthcare Research. i USA Inc. | What Might a Turnaround Expert Consider? 299 Restructure Medicare & Medicaid: Economic Factors— Healthcare Service Providers are Already “Underpaid” by Government USA Community Hospital Profit Margins & Inpatient Discharges by Payor Class 32% 4.5% Profit margins from patients Profit margins by Po with employer sponsored payor class (%), « insurance are sufficient to 2007 “9% -12% leave hospital industry with positive overall margin, 1 1 Q, 45% despite being only 36% of inpatient discharges. 100% a 5%, Reimbursement cuts to Percent of total ° Medicare and/or Medicaid inpatient would pose significant discharges, by 36% challenges, as hospitals payor class already realize negative (%), February margins from those payor 2009 classes. Employer ; | Sponsored Medicare Medicaid Self-Pay Total Insurance Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2007, for community hospitals. Morgan Stanley Healthcare Research. Ce USA Inc. | What Might a Turnaround Expert Consider? 300 HOUSE_OVERSIGHT_020991