A hospital CEO recently told community leaders his health system faces a financial loss this year and tough sledding in the future.
In fact, a slew of changes in health care funding are turning many Mississippi hospitals from cash cows into dinosaurs.
As cash cows, hospitals became economic engines for the state and their communities. A 2012 study by the Mississippi Hospital Association showed the economic impact: $11.9 billion total impact on the state economy; 60,143 full-time-equivalent employees (5.7% of total statewide employment); an additional 34,557 jobs outside of hospital facilities; and payrolls totaling $3.2 billion per year.
This impact is now threatened and will likely diminish in coming years.
The Affordable Care Act (Obamacare) reduced payments to hospitals for uncompensated care, expecting Medicaid expansion to begin covering low-income Mississippians who show up at hospitals without the means to pay for treatment. About 138,000 adults could have gotten Medicaid, but when Governor Phil Bryant and the state’s Republican leadership opposed Medicaid expansion, they were left uninsured and hospitals were left holding the bag.
A Kaiser Family Foundation publication said Mississippi faced “eviscerating cuts in federal subsidies” totaling tens of millions of dollars, but Bryant and the Mississippi Legislature came up with only $4.4 million in subsidies to offset the cuts. And, experts say these subsidies are at risk to go away.
Obamacare also offered insurance coverage for low-income Mississippians (those not eligible for the Medicaid expansion) by subsidizing their premiums. Of 155,000 Mississippians eligible for the subsidies, about 92,200 signed up. However, the more affordable policies came with high deductibles and out-of-pocket co-pays totaling up to a legal limit of $6,350. People who sign up for these policies find out that doctors and hospitals require upfront payments for un-covered costs. Many, then, choose to avoid needed services and surgery procedures, reducing the volume of paying customers served by hospitals. Or they drop coverage and head back to emergency rooms.
Medicare changes also hurt. The budget “sequester” Congress passed in 2013 reduced Medicare reimbursement rates across the board. Then, there are looming revenue challenges caused by Medicare’s move from “fee for service” reimbursements to “bundled payment” reimbursements.
Lower payments for uncompensated care, low participation by patients with high deductibles and out-of-pocket co-pays, and lower Medicare reimbursement rates add up to big revenue declines for hospitals.
All this puts hospitals’ survival at risk.
“It’s my opinion that some of the rural hospitals are not going to make it,” Dr. LouAnn Woodward, head of the University of Mississippi Medical Center, told The Clarion-Ledger last week. Several have closed already.
Publicly available financial information shows even our strongest hospitals stressed by these changes, including North Mississippi Medical Center in Tupelo, Forrest General Hospital in Hattiesburg, Rush Foundation Hospital and Anderson Regional Medical Center in Meridian, Baptist Health Systems in Jackson, and Memorial Hospital in Gulfport.
State and local leaders should take heed and work to preserve these important health care organizations and vital economic engines.