September ABI Journal Article Raises Points to Consider for the Coming Transformation of the U.S. Health Care System

September ABI Journal Article Raises Points to Consider for the Coming Transformation of the U.S. Health Care System

Alexandria, Va. — As the government, private industry and American public adjust to the changes brought by the Patient Protection and Affordable Care Act (PPACA), an article in the September edition of the ABI Journal raises a number of points for restructuring professionals to consider during the transformation of the health care industry. “It is important for restructuring professionals to recognize the significance of a potential disruptive transformation of a $2.6 trillion industry within the next three to 10 years,” Dr. David Gruber and Paul Rundell of Alvarez and Marsal (New York and Chicago, respectively) write in their article, “Restructuring and PPACA: Points to Ponder on the Coming Transformation of Health Care.” Dr. Gruber and Rundell contend that even healthy organizations will be challenged by the cultural shift from the previous volume-based, fee-for-service system to the value-based, shared-risk system under the new law. Some of the challenges identified by the authors include: • There is the potential for rising costs, driven by increased insurance coverage. National health expenditures, inclusive of the impact of PPACA, have been forecast by the Centers for Medicare and Medicaid Services to reach $4.6 trillion in 2020, an increase of $2 trillion in 10 years. • PPACA does not affect elderly and disabled Medicaid recipients, who represent 25 percent of enrollees and 69 percent of total costs. • Employers currently offering health insurance to their employees may drop coverage for all their employees or only “sicker-than-average” employee populations. • The transformation will be metropolitan area-specific, subject to local factors and occurring at different rates in different parts of the country. • Financial penalties, pilot initiatives and managed care will not fundamentally transform health care delivery or contain costs. The transformation to the shared-risk system under PPACA will require actuarial and risk-management expertise, according to the authors. “All stakeholders, including restructuring and bankruptcy firms, will require a fundamental understanding of the evolving (local) health care market,” Dr. Gruber and Rundell write. “Debt restructuring, asset redeployment, contracts, collective-bargaining agreements and related activities are dependent on future cash-flow expectations. Uncertainty potentially adds an additional risk premium.” To obtain a copy of “Restructuring and PPACA: Points to Ponder on the Coming Transformation of Health Care,” published in the September edition of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at [email protected]. For more information on the intersection of the health care and restructuring industries, the ABI Health Care Insolvency Manual, Third Edition is available in the ABI Bookstore at bookstore.abi.org. ### ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.