HCA Holdings 2012 Annual Report Download - page 49

On the other hand, because 43% of our revenues in 2012 were from Medicare and Medicaid, reductions to
these programs and changes to reimbursement methodologies may significantly impact the Company and could
offset any positive effects of the Health Reform Law. It is difficult to predict the size or impact of the reductions
to Medicare and Medicaid spending and other reimbursement changes resulting from the Health Reform Law
because of uncertainty regarding a number of material factors, including the following:
• the amount of overall revenues the Company will generate from Medicare and Medicaid business when
the reductions are implemented;
• whether reductions required by the Health Reform Law will be changed by statute or by judicial
decision prior to becoming effective;
• the size of the Health Reform Law’s annual productivity adjustment to the market basket;
• the amount of the Medicare DSH reductions that will be made, commencing in federal fiscal year 2014;
• the allocation to our hospitals of the Medicaid DSH reductions, commencing in federal fiscal year
2014;
• what the losses in revenues will be, if any, from the Health Reform Law’s quality initiatives;
• how successful ACOs will be at coordinating care and reducing costs or whether they will decrease
reimbursement;
• the scope and nature of potential changes to Medicare reimbursement methods, such as an emphasis on
bundling payments or coordination of care programs;
• whether the Company’s revenues from UPL programs, or other Medicaid supplemental programs
developed through a federally approved waiver program (“Waiver Program”), will be adversely
affected because there may be reductions in available state and local government funding for the
programs; and
• reductions to Medicare payments CMS may impose for “excess readmissions.”
Because of the many variables involved, we are unable to predict the net effect on the Company of the
expected increases in insured individuals using our facilities, reductions in Medicare spending, reductions in
Medicare and Medicaid DSH funding, and numerous other provisions in the Health Reform Law that may affect
the Company. Further, it is unclear how efforts to repeal or revise the Health Reform Law and remaining or new
federal lawsuits challenging its constitutionality will be resolved or what the impact would be of any resulting
changes to the law.
If we are unable to retain and negotiate favorable contracts with nongovernment payers, including managed
care plans, our revenues may be reduced.
Our ability to obtain favorable contracts with nongovernment payers, including HMOs, PPOs and other
managed care plans significantly affects the revenues and operating results of our facilities. Revenues derived
from these entities and other insurers (domestic only) accounted for 54.5%, 52.9% and 52.7% of our revenues for
2012, 2011 and 2010, respectively. Nongovernment payers, including managed care payers, continue to demand
discounted fee structures, and the trend toward consolidation among nongovernment payers tends to increase
their bargaining power over fee structures. As various provisions of the Health Reform Law are implemented,
including the establishment of the Exchanges, nongovernment payers increasingly may demand reduced fees.
Our future success will depend, in part, on our ability to retain and renew our managed care contracts and enter
into new managed care contracts on terms favorable to us. Other health care providers may impact our ability to
enter into managed care contracts or negotiate increases in our reimbursement and other favorable terms and
conditions. For example, some of our competitors may negotiate exclusivity provisions with managed care plans
or otherwise restrict the ability of managed care companies to contract with us. It is not clear what impact, if any,
the increased obligations on managed care payers and other payers imposed by the Health Reform Law will have
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