The new federal health care law is giving millions of uninsured Americans health coverage -- and many of them are expected to get long-delayed surgeries and seek other crucial medical care.

So why are some hospitals up for sale or desperately seeking to align with others?

One reason is that the health law pressures hospitals to reduce costs and offer better value through new rules that reward them more for the quality of care they deliver than for the number of patients they treat.

"If hospitals cannot adapt and play under the new rules," said Maribeth Shannon, a director at the California HealthCare Foundation, "it will be a challenge for them to survive."

Just this month in the Bay Area, the financially strapped nonprofit Daughters of Charity Health System, based in Los Altos Hills, announced it will sell its six hospitals -- four in the Bay Area and two in Los Angeles. And last week, UCSF Benioff Children's Hospital and Children's Hospital in Oakland formally linked arms to help broaden their services and cut costs. In October, Sutter Health transferred ownership of the beleaguered San Leandro Hospital to the Alameda Health System.

Perhaps most notably, the health care law signed by President Barack Obama in March 2010 imposes significant cuts in hospital reimbursements for Medicare -- about $155 billion nationwide from 2010 to 2020. California's more than 400 general acute-care hospitals stand to lose about $17 billion, according to the California Hospital Association.

The law also reduces Medicare payments to hospitals that report excessively high rates of avoidable readmissions within 30 days of discharge for patients who were treated for heart attacks, heart failure or pneumonia.

Next year, Medicare reimbursements also will be reduced at hospitals where patients picked up an infection that lengthened their stay.

The Affordable Care Act, widely known as "Obamacare," also encourages doctors and hospitals to form "accountable care organizations." These networks of providers -- including primary care doctors, specialists, hospitals and home health care services -- work together to coordinate the patients' care.

It's a different health care model than the "fee-for-service" system that exists in the U.S. today -- in which economic incentives are built around providing more treatments, not fewer.

Originally posted here:

New health care law: Hospitals pressured to slash costs, improve quality of care