How the Affordable Care Act is affecting Gainesville
Published: Sunday, November 24, 2013 at 5:44 p.m.
Last Modified: Sunday, November 24, 2013 at 5:44 p.m.
With such a large health care sector in Gainesville, what effect — if any — could the Affordable Care Act have on the local economy?
Hospitals and physicians say they see an opportunity to receive reimbursement from more patients who currently cannot pay as more people get health insurance. In theory, however, that is supposed to lower the cost of care to everyone else who is now subsidizing indigent care through higher premiums and higher charges for care.
Doctors are retiring or leaving small practices for larger ones over frustrations with insurers that started before the ACA — also known as Obamacare — went into effect, leaving more vacancies in medical office parks.
Other area businesses that provide products or services to health care providers see opportunities if demand increases for surgical devices or other technology used by practitioners, but in the case of medical device manufacturers, they also face added taxes they say will slow growth.
Then there are the same issues that Gainesville shares with the broader economy regarding insurance costs to businesses, consumers who will pay more or less based on their circumstances, and the potential for a healthier, productive workforce.
In 2011, health care and social assistance establishments accounted for 26 percent of private-sector workers and 36 percent of the payroll in the Gainesville metro area, with 20,774 employees making $1.02 billion, according to the U.S. Census Bureau.
UF Health Shands Hospital provides $80 million to $100 million in unreimbursed care out of an annual budget of about $1.1 billion, said Dr. David Guzick, president of UF Health.
Florida has 3.8 million uninsured people, or 25 percent of the population, including 45,000 in Alachua County.
On one hand, the cost to care for those people is borne by those who can pay, so the hospital gets paid either way. On the other hand, the care uninsured people receive often costs more since they tend to wait until late into their illnesses to seek emergency treatment that costs more to provide. If more people were insured and received ongoing care earlier, the hospital would save money, Guzick said.
“Our revenues would not change, but our costs would decline,” Guzick said.
If UF Health were able to save a fraction of those unreimbursed costs, it would invest it back into faculty, equipment, research and construction, he said.
“The Affordable Care Act, if it were working, would be better for us, and we hope it will work,” Guzick said.
UF Health has trained counselors to help people who are interested in signing up for insurance through the ACA health care exchange.
The complexity and requirements of the ACA will challenge small medical practices, causing some doctors to retire or leave small practices for large practices, said Dr. Norman Levy, president of the Alachua County Medical Society. The needed structural changes should result in increased hiring, purchasing and investments in the larger medical operations.
Physicians already are overwhelmed with insurance company demands that Levy said interfere with their ability to determine the best course of treatment and medications, and the ACA will present similar challenges.
Realtor Beau Beery of Coldwell Banker Commercial M.M. Parrish Realtors said there has been a significant increase in office vacancies in medical parks this year as the shift already has begun.
“They’re so riddled with regulations that what they entered the career to do — which was to help people — has become so difficult that they don’t want the extra hassle of ownership and the stress of it, so let me just go and help people and get a salary and be done at the end of the day,” he said.
Beery said the property owners face a conundrum. They can convert medical offices — which have small exam rooms, sinks in every room and Formica countertops — to general office space, “but not many general office people want to be in medical parks.”
As a result, the owners have less income for development or to purchase other assets.
“It just ripples all over the place,” Beery said.
Among local businesses that count medical practices among their customers, two of the largest — RTI Surgical and Exactech — expect to pay $2 million and $1.6 million respectively this year for the medical device tax to pay for ACA insurance subsidies, money that won’t be available to invest in new employees and product development.
Another company, AxoGen, has said that business for its surgical products could increase if more of the newly insured received peripheral nerve repair surgery.
RegisterPatient already has benefited from requirements for physicians to adopt electronic medical records.
Shadow Health faces conflicting forces on the demand for its software to train nursing students, said Chief Financial Officer Patrick Bizub. Demand for new nurses that is already high could increase as the newly insured seek more care, but insurers have been cutting reimbursement rates while demanding more skills, licensing and educational requirements.
Plus, university systems struggle to recruit qualified educators to expand nursing programs, he said.
For the broader business community, companies in industries that have not traditionally offered health insurance, such as restaurants and construction companies, are wrestling with staffing and hours since the ACA requires those with 50 or more employees to offer insurance.
In an October interview, Jim Painter of Painter Masonry said they are holding their employee count to 48 so they can continue to compete with smaller companies when bidding for jobs.
Keith Lynn Hodge, senior agent at Ference Insurance Agency, has been helping small businesses weigh their options.
Hodge said businesses that are renewing group insurance plans are seeing smaller rate increases this year — in the range of 7.5-8.2 percent — compared with 18-32 percent for this year’s rates. That is more in line with the 6-10 percent annual rate increases he said he has seen over his 17 years in the business.
Other companies are weighing whether it is better to offer insurance or send employees to the exchange, he said. In one case, the exchange would be a better option for an employee who would qualify for a federal subsidy for her and her children, but who would have to pay for 100 percent of the cost of her children’s insurance through the group plan.
At another company, the owner wants to provide insurance to a valuable employee who would not qualify for a subsidy because of his income but might otherwise move to a larger company that offers insurance.
“However they get covered is definitely a good thing,” Hodge said.