“We don't expect job losses here,” said Cass Sunstein, administrator of the Office of Information and Regulatory Affairs in the White House budget office.
It was a message that hospital advocates echoed. However, others were skeptical of the claim that hospitals could obtain significant savings without reductions in staff, which is their single largest cost.
Jennifer Breuer, a partner at the Drinker Biddle & Reath law firm in Albany, N.Y., said she expected staff reductions to constitute the biggest category of savings from the regulatory rollback, despite hospital assurances otherwise.
“I don't think it will happen on Day 1, but it could happen over time,” she said about staff reductions.
Paul Keckley, executive director for the Deloitte Center for Health Solutions, agreed that much of the savings will come through a reduction in the number of full-time employee positions at hospitals. However, hospitals will undertake fewer job cuts than implied by HHS' estimates because of the disconnect between national estimates and individual healthcare facilities.
“There's a difference between models in Washington and reality for hospitals, which tend to round up when they are looking at the potential of eliminating part of a position,” he said.
The expectation of hospital employee reductions appears to follow the savings regulators expected, according to the “summary of cost savings” in the federal rule. That analysis noted that about half of hospitals' annual $900 billion spending goes to “staff compensation.”
“The changes in the area of medical staffing and several other areas would allow hospitals more flexibility in hiring and staffing decisions, including use of part-time and contract staff, to provide patient services efficiently and effectively,” the analysis noted. “Thus, the potential magnitude of the efficiencies that could be achieved is very large.”
The single largest category of annual hospital savings identified by the analysis of the proposed rule was $330 million from “medical staff.”
The report did not specify the type of staff that term included or the way in which hospitals would derive savings from them. A CMS official said further details of the analysis were not available.
Among the areas ripest for savings under the rule changes, according to hospital experts, are hospital lab and radiology departments. The proposed changes would allow hospitals to contract out such work.
“Critical-access hospitals will be pleased with the change and their ability to partner and contract out specific services that they had to previously do themselves,” Lisa Kidder, vice president of legislative affairs at AHA, said about the laboratory and radiology work.
However, she and other hospital advocates pushed back on the assumption that hospitals would obtain savings under this category through eliminating those hospital positions in favor of lower-cost outside contractors. Instead, the in-house lab and radiology staff could move to other needed work or even transfer out of those departments if they were qualified for other hospital functions, they said.
And even if those workers were no longer needed as hospital employees, one CMS official said, they might be re-hired as a contractor to do the same work.
“That's the sacred-cow analysis,” Breuer said.
Such expectations obscure the simple fiscal reality that hospitals derive savings through the greater use of contractors primarily because they provide the same services for less than costly in-house staff.
“You could potentially have just as much service as you need, as opposed to all this full-time employment,” Breuer said about the lab and radiology work.
The potential savings allowed by the rule changes also could affect higher-level personnel. Specifically, several provisions reduced the need for physician and executive oversight.
For example, the changes would drop Medicare limits that kept many nonphysician clinicians from practicing up to the full scope of practice allowed in each state.
“That's particularly of interest in states where the laws give a wider scope of practice to allied healthcare workers,” the AHA's Foster said.
She and other hospital advocates said such changes would not lead to those facilities needing fewer physicians. Instead, like the other regulatory changes that affected lower-level personnel, reducing the requirements for physicians to provide oversight and other duties would increase the amount of time they could spend caring for patients.
But the physician changes will not produce savings if they do not lead to fewer physicians at hospitals, hospital experts said. Breuer expects pushback to such changes from physicians who will ask, “What do you mean you're doing away with my well-paying job that I have had for all of this time?”
“But there will also be people who will say, ‘Hey we can really streamline the process and be more efficient,'” she added.
Hospitals should expect physician pushback, said Dr. Jeffrey Cain, president-elect of the American Academy of Family Physicians, but not over potential cuts of physicians from hospitals, which have been on a physician hiring spree in recent years. Instead, his group objected to Medicare allowing nonphysician hospital staff to prescribe medications and admit patients where state law gives that option.
“Patients are best served when they have access to a physician-led team that includes nurse practitioners and physician assistants,” Cain said.
Regardless of the ultimate financial impact of the changes, hospital advocates and outside experts agree the changes will free many clinicians from regulatory compliance tasks that were not improving patient care. It will be up to hospitals to decide whether to redirect those clinicians to provide more patient care.