Local health care providers face a flood of new patients as more Americans gain health insurance under President Obama's health care overhaul, a wave that means more paying customers but also more strain on hospitals and doctors.

The overhaul is also fundamentally changing the way providers are paid, with a new emphasis on quality over quantity. The sweeping changes mean hospitals must adapt or risk losing funding and potentially closing.

"It's just a sea change for our industry," said Jean Hitchcock, spokeswoman for MedStar Health, which runs 10 hospitals in the Washington-Baltimore area, including Washington Hospital Center, Georgetown University Hospital and Montgomery Medical Center. "It affects everything."

Source: Kaiser Commission on Medicaid and the Uninsured

More patients, more cost
Medicaid spending under the Patient Protection and Affordable Care Act, 2013-2022:
State Medicaid expenditures State Medicaid expenditures, no ACA Federal Medicaid expenditures Federal Medicaid expenditures, no ACA
D.C. $8.02 billion $7.89 billion $20.854 billion $19.85 billion
Maryland $53.19 billion $53.69 $69.06 $55.56 billion
Virginia $52.68 billion $50.07 billion $68.63 billion $52.22 billion

One of the biggest changes is the extension of Medicaid, the federal health insurance program for the poor, from enrollees making up to 100 percent of the poverty line -- more than $11,000 for a single person -- to those making 133 percent, or about $15,000. While states can opt out of the expansion, the District, Maryland and Virginia have agreed to it, though Virginia's acceptance is conditional on federal reforms.

That alone will add 31,000 enrollees to the D.C. program over the next decade, with 209,000 added in Maryland and 407,000 in Virginia, according to a study by the Kaiser Commission on Medicaid and the Uninsured. While the overhaul is underway, the expansion doesn't kick in until Jan. 1, 2014.

Tens of thousands more local residents are expected to get insurance through state health care exchanges, insurance marketplaces for residents without plans who don't qualify for Medicaid or Medicare.

"There's this pent-up demand we're going to see next January," health care lawyer Peter Pavarini said. "The question is, does the specific hospital have the capacity and health professionals to handle that influx?"

MedStar is planning to expand in the District, adding five physician practices and two multipurpose sites with features like rehab and urgent care. "We're trying to decongest our campuses and get the services closer to patients," Hitchcock said.

While experts warn of a shortage of primary care physicians, where new enrollees will likely head first, the law increases Medicaid payouts to lure doctors to areas with many newly insured residents.

Hospitals must shift from a model in which providers get paid for each treatment, to a pay-by-outcome model, in which providers are paid or penalized for meeting performance measures. Penalties already have begun for hospitals that readmit too many patients within 30 days of treatment.

That means changes for patients, too. Hospitals no longer have a financial incentive to bounce people from treatment to treatment, and many patients will have a clearer picture of what they will undergo and how much it will cost. That comes at a price, though -- more regimented treatments with less freedom for patients to explore their options.

The changes, coupled with slow economic growth, mean hospitals are dropping pay raises for their employees and cutting costs while trying to hit federal benchmarks. Since the total impact won't be felt until well after January, flexibility and efficiency are critical for hospitals.

"Many of my clients are already seeing declining income, harder to manage budgets," Pavarini said. "Some hospitals will close. Some people will lose jobs."

At Northern Virginia's Inova Health System, employees can opt into a performance-based bonus system in lieu of regular raises.

"We're looking at the patient experience," said Angie Mannino, senior vice president of human resources. "We're looking at what things cost to make sure the value is best for our patients."