Affordable Care Act: Investors

Affordable Care Act: Impact on investorsThe growing popularity and immediate access to non-acute services such as urgent care walk-in centers has made for a good investment subsector. “Changes to the ACA may benefit the non-acute sector and make investments more attractive,” said Lance Beder, partner in Health Care Transaction Services.

For example, since urgent care often is a lower-cost alternative, lawmakers might offer incentives to patients to use urgent care or other preventive settings as opposed to high-cost acute settings such as the emergency room.

“If non-acute services were reimbursed at a fixed negotiated rate without a deductible, this would continue to drive volume and be a tremendous sector to invest in,” Beder said.

According to, in 2016, 20 million people were enrolled to receive health insurance. This number included those benefitting from enrollment in the marketplace and the Medicaid expansion, as well as the young adults that chose to stay on parent plans or selected other coverage provisions.

As the market expands, it has piqued financial investors’ interest. But with significant changes looming in the near future, choosing the right subsector in which to invest can be tricky. For example, investors in hospitals and physician practices could experience a hit to the bottom line should there be a contraction of those with access to health insurance.

“If reimbursements continue to decline, this will have a negative impact on earnings,” Beder said.

Hospitals and physicians are also keeping a close eye on whether a repeal will shift the reimbursement burden away from insurers, while placing greater responsibility for payment on individuals.

For instance, in the past, one way to keep insurance premiums down was to raise deductibles, which forced patients to pay more upfront costs. This has slowed reimbursement to providers and driven up the use of at-risk services for which patients seldom have the means to pay. In turn, this has increased the amount of write-offs to patient receivables.

“Traditionally, providers prefer to be reimbursed by insurers. Patients are slower and harder to collect from,” Beder said.

Changes to the ACA could result in more uninsured people seeking coverage through other programs.
“If the population of the insured shrinks, it could place a burden on non-acute providers as well as on federal and state government, as patients would return to more costly care, such as emergency rooms,” Beder said.