Nursing: Financial Issues

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How Financial Issues are Causing Changes in Reimbursement and Care Delivery Models

After the enactment of the Affordable Care Act (ACA) in 2010, the healthcare sector experienced major changes beyond what was expected. Traditional practices, responsibilities, roles, and authority changed for healthcare stakeholders (Santilli & Vogenberg, 2015). The most affected area is the financial aspect of the healthcare system under the Act. The Act is designed to improve sharing with regard to risks, savings, and relationship building (Santilli & Vogenberg, 2015). In addition, about 30 million persons have already joined the healthcare insurance through the Act, and healthcare facilities are expected to meet increasing demands. In this respect, financial issues have started to emerge, affecting reimbursement and payment models (Anderson, 2014).

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Revenue Pressure

The ACA promotes accountable care organizations (ACOs) and bundled payments. These models have and will continue to have major impacts on hospital revenue in both positive and negative ways (Barlas, 2014). Positively, it has improved hospital consolidation and closures (Barlas, 2014). On the other hand, hospitals continue to experience dwindling operating margins and slow revenue growths, which are now major critical issues (Santilli & Vogenberg, 2015; Barlas, 2014). Notably, hospitals have received less payment from payers while the number of patients who demand quality care has suddenly increased. While the US economy continues to grow, majorities of healthcare facilities continue to operate with slim and shrinking margins (Barlas, 2014). Only a smaller percentage of hospitals have noticed revenue growth.

Lower Reimbursement Rates

Low Medicaid reimbursement rates also present financial issue to healthcare providers (Anderson, 2014). Specifically, physicians are known to avoid Medicaid because of poor reimbursement. In addition, they also complain of rising costs of administration, but no sufficient policy to control this related fiscal burden. Challenges are frequently cited in delayed payments and claim rejections based on incorrect completion of the billing form, failure to verify patients’ eligibility, lack of preauthorization requirements for specific services, and other intricate rules and regulations that affect claim fillings.

The Penalty Problem

The current healthcare system is characterized by penalty challenges under the ACA Act. Mandates, penalties, and bonus reimbursements are a part of the compliance and regulatory standards expected under the Act. It is estimated that about 2,225 healthcare facilities were fined in 2013 under the provision of the Hospital Readmissions Reduction Program (HRRP) (Anderson, 2014). Fines were over $227 million, and the most affected hospitals were mainly located in low-income areas. When these fines are considered and the decline of Medicaid Disproportionate Share Hospital (DSH) payments, healthcare providers now grapple with notable declines in their revenues, but simultaneously strive to enhance quality of care to meet or maintain the ACA’s standards. Amidst these fines, Medicare reimbursement is also expected to decline in the coming years.

Hiring and Retention of Labor

It is observed that the new pay-for-performance standards have significantly affected hiring and retention of nurses and physicians. Hospitals that fail to meet quality scores usually suffer reduced reimbursements and subsequently, low budgets (Anderson, 2014). This implies that some units may be closed. Additional stress and financial losses now present new threats to recruitment and retention of nurse and physicians. Moreover, nurses now suffer more cases of burnout and increased dissatisfaction. Nurse shortfall is expected as regulatory burdens increase in hospitals. Meanwhile, workplace stress also increases as few specialists are expected to deliver quality care to a growing number of patients. Researchers have shown that low revenues often lead to poor recruitment and retention of nurses (Darkwa, Newman, Kawkab, & Chowdhury, 2015).

Required Investments

Healthcare facilities are expected to make massive investments in their core operations to improve healthcare technologies, quality of care and performance, infrastructure and data management (Anderson, 2014). More importantly, healthcare records are now vital for shared savings and costs. Although the electronic Health Records (EHRs) capture patient data, and they are integrated with Health Information Exchanges (HIEs), EHRs do not have adequate information to meet diverse needs of all providers. Hospitals require massive financial resources to invest in better platforms to capture sufficient information and manage quality of care.

Claim data from payers have comprehensive information about patients and related costs of care delivery. However, providers lack robust systems to capture such data. In most cases, they do not even participate in all episodes of care delivery and related cost issues.

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Emerging Risks and Compliance Issues

The reduction in hospital revenues continues to be the biggest emerging issue for hospitals. These declines have been linked to penalties related to failure to comply with the Hospital Readmissions Reduction Program (HRRP) and the Hospital-Acquired Conditions Reduction Program, as well as the Medicaid Disproportionate Share Hospital (DSH) payments (Anderson, 2014). As such, hospitals now face financial risks and budget cuts with potential negative effects on operations and investments. At the same time, they are expected to increase quality of care and meet new ACA standards.

Hospitals should strive to ensure compliance with various regulations to avoid penalties and manage costs to meet their budgets.

Medicare Shared Savings Program

The Medicare Shared Savings Program (MSSP) accounts for MSSP ACOs, a quality-driven physician compensation, but waivers are provided for facilities not signed under ACO participation. This compensation should adhere to Stark provision, the Anti‐Kickback Statute and CMPs, all of which need the arrangement be fair market value and commercially reasonable.

Physicians are compensated based on quality care delivered. However, some researchers have shown that significant statistical uncertainty lies in the MSSP, which could lead to inappropriate payments (DeLia, Hoover, & Cantor, 2012). It is recommended that ACO payment approach should be reviewed to eliminate any uncertainty in order to enhance efficiency and eliminate risks.


The current healthcare model is based on cost-saving practices. As such, different programs have been created for possible reimbursement reduction. They include CMS’ Hospital Readmissions Reduction Program and the Hospital-Acquired Conditions Reduction Program among others. Unfortunately, not many healthcare providers have been able to meet thresholds set under the Act. Consequently, penalties are applied. Every year, thousands of hospitals incur penalties related to these programs. As previously observed, these penalties affect financial status and budgeting of hospitals (Anderson, 2014; Santilli & Vogenberg, 2015). In addition, they also negatively influence staff recruitment and retention.

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Quality Healthcare Risks

The US healthcare system has always focused on quality of care, and American physicians and nurses have continually strived to enhance practices and deliver the best care, but with mixed results. The ACA model was based on providing quality of care by moving medical professionals from the fee-for-service model of health care reimbursement to pay-for-performance, which rewards quality of care standards achieved (Anderson, 2014).

However, perhaps some unintended outcomes now threat the quality of care delivery. For instance, the dwindling revenues, penalties, low rates of reimbursement, heavy workload, staff layoffs or shortage, and limited resources are now sources of concerns for the American healthcare system (Anderson, 2014).

Improving Nurse Education

In some instances, public policy may not address all problems facing the nursing profession (Anderson, 2014). Some of these problems are related to professional training and nurse education. Nurse education will eventually drive nurse leadership at every levels to ensure that nurses can make their own decisions and contribute toward important policies. Nursing education should support further education through financing to eliminate financial burdens among nurse students while producing professional nurse leaders who can explain financial impacts of their practices, understand methods that can be applied to improve care and operational excellence, and assess opportunities for nursing to advance their clinical and economic practices.

This implies that education would help nurses and physicians to address leadership skills. Nurses, therefore, are encouraged to predict what specific skills, knowledge, and abilities are required to advance and lead the profession in the future (Sherman & Pross, 2010). That is, nurses should plan leadership and develop it to ensure that both current and future leaders at all levels are present.

Remove Barriers to Access

The current requirement related to the scope-of-practice is additional barrier to nursing evolution and growth (Anderson, 2014). By eliminating such barriers, nurses would practice to their full potential, gain proficiency, and leadership skills. Moreover, opportunities for growth in career and leadership would result increased nurse retention and avert future shortage of nurses.

Interprofessional Collaboration

Interprofessional collaboration is good for the nursing profession because nurses work with other professionals outside their field (Sherman & Pross, 2010). In this case, nurses would strive to ensure effective coordination and communication among health professionals with the ultimate goals of improving the quality and safety of patient care. Health professionals and other stakeholders working collaboratively as integrated units draw on individual and collective skills and experience across disciplines to advance their practices. They strive for diverse inputs and respect the contributions of each member engaged. This allows every member to practice at a higher level. The outcome is certainly improved patient and nurse outcomes, including higher levels of patient satisfaction and nurse retention.

Improving Work Environment

The future of nursing should also focus on active interventions to improve work environments. That is, a deliberate effort should aim to reduce work overloads and other related challenges for nurses (Anderson, 2014). This approach may help the profession to reduce attrition and costly recruitments.


Anderson, A. (2014). The impact of the Affordable Care Act on the health care workforce. Web.

Barlas, S. (2014). Hospitals struggle with ACA challenges. Pharmacy and Therapeutics, 39(9), 627-629.

Darkwa, E. K., Newman, M. S., Kawkab, M., & Chowdhury, M. E. (2015). A qualitative study of factors influencing retention of doctors and nurses at rural healthcare facilities in Bangladesh. BMC Health Services Research, 15, 344. Web.

DeLia, D., Hoover, D., & Cantor, J. C. (2012). Statistical uncertainty in the Medicare Shared Savings Program. Medicare & Medicaid Research , 2(4), E1-E16. Web.

Santilli, J., & Vogenberg, F. R. (2015). Key strategic trends that impact healthcare decision-making and stakeholder roles in the new marketplace. American Health & Drug Benefits, 8(1), 15–20.

Sherman, R., & Pross, E. (2010). Growing future nurse leaders to build and sustain healthy work environments at the unit level. OJIN: The Online Journal of Issues in Nursing, 15(1), Manuscript 1. Web.

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