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No-Fault Reform Likely Will Haunt Healthcare Providers After Pandemic Ends

As the debate raged last year over no-fault reform in the state of Michigan, one of the arguments against it was the potential impact it could have on healthcare providers.

While no one could have predicted a global pandemic in 2020, providers in SE Michigan in particular and around the U.S., in general, are in the midst of experiencing some of the most shocking financial losses we have ever seen. Beaumont and Henry Ford are expected to lose hundreds of millions of dollars while healthcare providers around the entire country are laying off “non-essential” staff at an alarming rate.

There is the little question these financial challenges would have happened once COVID-19 struck whether or not there was auto insurance reform in the state. But the reform will exacerbate the situation in the months ahead. The pandemic is forcing healthcare providers to focus almost exclusively on COVID response along with a few other critical services, such as birthing centers and other emergency care. More profitable procedures, which generally are considered non-essential (think non-emergency heart surgeries, gastric bypass, and fertility treatments) are being put on hold for safety reasons.

While there are fewer vehicles on the road and fewer car accidents, once there is a gradual reopening of the economy, there will be more traffic and more accidents. As tragic as car accidents are, the recent auto insurance reform already has made healthcare services related to accidents less profitable. If the large hospital systems are looking at hundreds of millions of dollars per month, that will trickle down to individual providers, who have less opportunity to regain revenue. The long-term impact could be drastic on practices that simply won’t have the margin needed on services to make up for revenue lost during the pandemic.

We continue to encourage the state of Michigan to reconsider some of the no-fault reforms that were enacted last year. The welfare of our healthcare system in the Great Lakes State may be at stake.

If you have any questions, please feel free to contact us today.