Hospitals continued to report weaker demand for inpatient care even as the Affordable Care Act expanded coverage to millions of Americans, the latest data from the American Hospital Association show.
Demand for hospital care, as measured by the total number of days of hospital care provided throughout the year declined by 1% in 2014 compared with the prior year, according to the Chicago-based trade group's annual survey of the nation's hospitals. Inpatient days have declined in recent years, dropping 1.6% in 2013; 0.9% the prior year and 1.3% in 2011.
Hospitals reported a slight increase in the average length of a patient's stay—5.5 days in 2014 from 5.4 days the prior year—but admissions and inpatient surgeries also declined slightly with inpatient days. Meanwhile, hospitals continued to see a shift toward outpatient care. Hospitals reported a 2% growth in both emergency room and outpatient visits.
Overall, hospitals' net margins remained strong, increasing to 8.3% in 2014 up from 7.9% the prior year. That is despite the fact that non-operating revenue declined by 10%. Net revenue reported by hospitals in 2014 totaled $882.3 billion compared with $849.3 billion the prior year.
The costs of uncompensated care declined 7.8% to $42.8 billion from $46.4 billion the prior year, the AHA reported. Uncompensated care, or the total of hospitals' charity care and unpaid bills, accounted for 5.3% of hospital expenses compared with 5.9% before insurance expansion.
But, in 2014, hospitals also saw larger shortfalls from Medicaid, which enrolled more people in states that expanded eligibility. Medicaid shortfalls increased to $14.1 billion in 2014, up from $13.2 billion the prior year. Medicare shortfalls were largely flat at $37.2 billion compared with $37.9 billion the prior year.
The data also underscored the consolidation trend underway across the nation's hospitals. The number of hospitals in a system increased slightly, by 1%, to 3,183 or about two-thirds of the 4,926 community hospitals.
Survey respondents also reported greater participation in accountable care organizations and medical home models.
In 2014, 25% of hospitals reported participation in an ACO, up from 6% in 2011. One-quarter of hospitals also reported a medical home program in 2014 compared with 14% in 2011.
Hospitals are responding to the push to move into contracts that pay providers to better manage costs and healthcare quality, said Ashley Thompson, senior vice president, public policy analysis and development at the AHA. “They're really transforming care delivery,” she said.