Breaking Point Budget Woes Put Heat On Hospitals

By now, radio listeners all over Massachusetts have heard the ad — the one featuring the sounds of a building straining and buckling, mingled with an announcer’s dire words.

 

“Jammed emergency rooms, longer waits for treatment, skyrocketing insurance costs — creating more uninsured, more pressure on a health care system that’s ready to crack,” the voice intones. “But instead of reform, the Romney budget only makes matters worse.”

The spot was paid for by the Mass. Hospital Assoc. (MHA), which for years has been warning about the financial strain felt by an underfunded health care industry in Massachusetts — warnings, the group says, that have fallen on deaf ears.

Gov. Mitt Romney’s fiscal year 2005 budget, it claims, is the last straw, shifting costs from public to private insurers, cutting Medicaid support for hospitals, and creating an environment where providers cannot afford the cost of care, and patients struggle to find affordable insurance.

“It’s unconscionable that approximately 600,000 people in Massachusetts now have no health insurance. That’s greater than the total population of the city of Boston,” MHA President Ronald Hollander said. By contrast, he added, four years ago, there were 368,000 uninsured residents in the state.

“This is not some cataclysmic event that’s just happened. They’ve been underfunding for years,” said Robert DeVey, senior vice president of finance for the Sisters of Providence Health System, which includes Mercy Medical Center.

“It’s nothing new. It’s a continuation of the state’s policy, and it particularly hurts those who have a disproportionate amount of business with the state because of the programs they offer — such as our Providence Behavioral Hospital — and hospitals that are in poor communities.”

What he and others fear is that hospitals, already under severe financial strain in many cases, will find it more difficult to remain open if Romney succeeds in lowering the Medicaid reimbursement rate — which already pays only 71 cents on the dollar for care provided, on average — even further, to a planned 61{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} or 62{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}.

Add in Romney’s proposed cuts in state funding for the uncompensated care pool, through which free care is provided to uninsured and underinsured patients, and the medical community is facing what DeVey calls a “perfect storm” of additional stress. And that’s why administrators are calling on state lawmakers to stop the bleeding.

Calls for Change

And those cries are being heard, said state Rep. Daniel Keenan, D-Agawam, who has long chaired the Legislature’s Medicaid Committee and also co-chairs the Hospital Task Force, which has been taking testimony from administrators at a series of hearings.

“I’ve talked to hospital administrators throughout the state, especially in Greater Springfield,” Keenan told The Healthcare News. “Some are in an urban setting, some in a suburban setting; some have a higher private-payer percentage, and some have a higher public-payer percentage. And every one of those hospitals is having trouble financially.”

DeVey argued that the “marquee hospitals” aren’t affected as greatly as smaller, community institutions.

“Those hospitals have big endowments and leverage with insurance companies, and we don’t,” he said. “They can make up the government shortfall by passing it on to commercial carriers, but it’s much harder for at-risk community hospitals to pass this underfunding on. These community hospitals are the ones we need to pay attention to — and that’s most hospitals.”

Behavioral health programs, such as the ones offered at Providence, are by their very nature also put at risk by financial strain, DeVey added.

“Very few behavioral health programs in the country have the positive payer mix of a Betty Ford,” he said. “More likely, the people who need behavioral health often have a hard time holding a job and have other social issues, and are usually without insurance — in fact, I would say a disproportionate share of people who need these services are uninsured or underinsured. That makes it a tougher business, economically speaking.”

Keenan said the message is coming through loud and clear — but no one is sure how effective the House and Senate will be at altering Romney’s vision.
“We’ve been underfunding Medicaid for many years, and we know it’s going to cause even further financial strain on hospitals. But I’m hopeful that we can make some changes,” he said.

“Hospitals are having tremendous difficulty,” Keenan continued. “And I think there’s got to be a recognition that we have to make funding of hospitals a priority in our budget if we expect them to survive.”

Care Isn’t Free

Medicaid is far from the only challenge providers face, of course. Hospital administrators are especially wondering where the money will come from to care for uninsured or underinsured patients.

The money to provide hospital care for these citizens has come from the uncompensated care pool — but health professionals have complained for years that the state has not done its part to bolster the solvency of that pool.

Although the state increased its contribution last year from $100 million to $157 million, Keenan said, Romney is attempting to slice that figure by $65 million in the coming year, while asking hospitals to kick in $7 million more.

That’s bad news for hospitals that are hit disproportionately hard by the free-care obligation — such as Holyoke Medical Center, which serves one of the more underinsured communities in the Commonwealth.

“This is the poorest city in the state,” hospital President Hank Porten said after a recent visit to the facility by House Speaker Thomas M. Finneran. “But (Finneran) is a bright man and a quick study. He recognizes the unique challenges of a hospital that serves such a community.”

First and foremost among those challenges is making sure everyone who needs emergency care and other services gets them.

“We’re the poster child for poverty,” Porten said, “but we feel we have the ability and the need to take care of our community, regardless of the ability to pay.”

And that’s a refrain being repeated over and over by providers across the state: when it comes to health care, particularly emergency care, needs must be met, and there’s often no way to make up the money lost in free care when profit margins are already so thin — or, in some cases, nonexistent.

“Universally, there are problems with the pool,” Keenan said. “It’s a financial drain for all hospitals.”

Softer Tone

Porten stressed, however, that he understands the tough decisions that lawmakers have been making over the past few years to try to bring Massachusetts of its budget hole. “The state has plenty of economic challenges,” he said. “But at the same time, they’re working with us to find long-term solutions.”

Keenan takes a similarly diplomatic tone, saying he understands some of Romney’s money-saving recommendations to the health care industry, including an effort to shift patients away from hospitals when they can be adequately treated at community health centers or a doctor’s office.

“That makes sense,” Keenan said, “but it also makes sense to provide an adequate reimbursement for the care that’s being provided. And that situation is getting somewhat worse, not better.”

That’s why radio listeners are hearing the sounds of straining and buckling. It’s a sound hospitals and other providers are hearing every day.