While Warren County hospitals individually are still trying to figure out how they will be affected by health care reforms, the Kentucky Hospital Association is predicting that the state’s hospitals stand to lose $1.2 billion in revenue over the next 10 years.
Lower revenues will mean less money for wages and salaries of employees, less direct and indirect spending in each facility’s community, and delayed facility improvements.
That prediction is based on the economic impact that hospitals have now. The most recent report available showed that the state’s hospitals treated nearly 10 million people in all facets of their operations during 2008. Those hospitals employed 80,000 people with annual wages and salaries of $3.52 billion.
Some hospitals, because of current economic conditions, have already laid off employees. Jewish Hospital and St. Mary’s HealthCare in the Louisville area cut 500 positions this year. The provider and its parent company have been in talks recently about a merger with another health care provider to help with a failing bottom line.
“We are not there and we are hoping that we don’t have to do something like that (layoff),” Greenview Regional Hospital CEO Mark Marsh said.
Marsh said the hospital already is cutting costs where it can and deferring nonemergency spending on projects.
“But those can only go so far,” he said.
Marsh said the hospital hasn’t quantified exactly how health care reforms that are set to phase in through 2014 and beyond will affect the hospital.
“But we know that the Medicaid rolls are going to increase,” Marsh said.
The Medical Center also is beginning to weigh what the possible impact.
“The Medical Center is closely monitoring developments in government sponsored healthcare reimbursement programs, specifically Medicare and Medicaid, following the passage of recent health reform legislation,” Commonwealth Health Corp. Executive Vice President Ron Sowell said in an e-mail to the Daily News. “While it is too early in the development of expected regulations to fully model the financial impact of the legislation, it is apparent that Medicare reimbursements to hospitals across our country will be reduced over the next 10 years if the legislation is not amended by Congress.
“The Medicaid program is also expected to add a significant number of newly covered individuals under plans contained in the reform legislation,” Sowell said. “Neither Medicare nor Medicaid currently covers the full cost of hospital care provided to individuals in those programs.”
Changes in reimbursement come at a time when people who have health insurance are seeing their premiums and co-payments rise or COBRA insurance for the unemployed is running out or is too costly, all increasing the likelihood that hospitals will see more bad debt and charity cases, Marsh said.
In 2008, the cost for indigent care to Kentucky hospitals was $370.6 million, according to the Kentucky Hospital Association.
Greenview, a for-profit hospital, estimated in 2008 that it spent nearly $1 million to care for those patients who were uninsured or fell below the federal poverty line and consequently weren’t billed.
The Medical Center, a nonprofit hospital, estimated that $7.3 million was spent treating patients whose income was below the federal poverty level.
Neither hospital’s indigent care figure includes charity care to other uninsured people, or the full costs for Medicare and Medicaid services.
While local hospitals, in providing this report to the KHA, didn’t take into account health care reform legislation that was not yet passed, the reports did consider what a 10 percent reduction in collected revenues would mean.
Greenview, which says that 72 percent of its patients are covered by either Medicaid or Medicare, said the loss would reduce hospital wages and salaries annually by $1.8 million, reduce state and local tax revenue by $430,000 and have a ripple effect of a $9.4 million loss in regional sales.
The Medical Center’s report, which estimates that 66 percent of its patients are covered by government programs, would see a reduction in hospital wages and salaries annually of $7.7 million, $1.8 million less in state and local tax revenues and a $36.1 million loss in regional sales.
Marsh said some hospitals already are seeing a reduction in what they spend on purchases for equipment.
“Some are losing basic patient care when equipment breaks that they can’t replace,” he said.
Marsh said the future of hospital care still has many unknowns.
“We are trying to be as prudent with our resources as we can be,” he said.
Sowell said The Medical Center will continue to try to improve care while cutting costs.
“Our success in these two areas will allow The Medical Center to adapt to the changes in reimbursements created under the reform legislation while at the same time providing us the financial means to continue our investments in the latest technology, facilities, and a highly trained workforce.”
— For information about health care reforms and the dates they are set to be phased in, go to www.healthcare.gov
