Critical Condition Industry Faces Mounting Challenges As 2004 Dawns

Hank Porten remembers the bleak economic picture that greeted the health care industry at the start of 2003. One year later, he said, the landscape is different.
“Unfortunately, it’s different in a negative way,” said Porten, president of Holyoke Hospital. “Last month, we lost about $2 million in reimbursements from federal payments and state payments. In a community of our economic and demographic mix, that’s a real challenge to make up.”
Indeed, in most health care facilities in the Commonwealth, not just hospitals, if economic health was judged in the terms used for physical health, plenty of doctors and other professionals would be pronouncing their industry in critical condition.

There is no shortage of reasons why. Costs of care continue to soar over the reimbursements providers receive from public and private payers, while a continuing shortage of nurses and certain specialists have further stressed the system. Meanwhile, exorbitant liability insurance costs have begun to force some physicians to find other states in which to practice.

“The issues are the same as in previous years, but I think the magnitude of those issues has intensified this year,” said Michael Daly, CEO of Baystate Health System, noting that the reimbursement issue has become even more taxing because the current state budget did not bolster Medicaid payments.

“That was our biggest problem in prior years, and as we look out at 2004 and 2005, the state budget looks every bit as bad as it has for the past couple of years. There’s no relief in sight.”

And the current financial problems affect not only hospitals, but nursing homes, individual physician practices, and other health care providers. Almost as one, they’re saying the system is in worse shape than ever, with precious little being done to turn the tide.

Unbalanced Numbers

Porten sounds a little weary of stating hospitals’ case to state lawmakers.

“The state doesn’t fully realize that funding hospitals at 70{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the cost of care is not sustainable — and it’s certainly not sustainable in communities with economic challenges,” he said. “I think health care has to become a priority in reality, not just in rhetoric.”

Clearly, the reimbursement crisis extends to all areas of medicine. In one field that has historically struggled to stay in the black, behavioral health, area programs are still coming to grips with a state budget that leaves them with little to cheer about.

“It really hit hard,” said Robert Simpson, COO of Behavioral Health Care for the Sisters of Providence Health System, which oversees Providence Behavioral Health Hospital. “In four years, there have been no rate increases for the behavioral services that are being provided in hospitals or outpatient settings, and at the same time, in this latest budget, the state made a 2{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} to 3.5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} across-the-board rate cut for all hospitals.”

Indeed, all hospitals are feeling the pinch. But the numbers in behavioral health were already so grim that the current financial strain has been tougher on those services, Simpson said. “With medical inflation rising at 3{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} per year, that means people are already 12{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} behind in the past four years just on staying up with their costs.”

Meanwhile, liability insurance has become so costly in some specialties, including obstetrics and radiology, that physicians are being chased out of the state in search of less financially burdensome regions in which to practice. Combined with the reimbursement woes, the liability issue threatens to create a severe access problem for patients, Daly said.

“Specialists are leaving the state because they’re no longer able to maintain the income levels they enjoyed in prior years,” he said. “We’re driving doctors out of this state, and that is a huge problem for us.

“A few hospitals, because of their size and backing, manage to get by, but two-thirds of hospitals are still operating with losses, and we aren’t making any gains on that number. At some point in time, that will lead to closures. Hospitals have to generate surplus from somewhere, or they’ll eventually go out of business.”

Dwindling Nurses

As if finances weren’t placing enough strain on Massachusetts’ health care industry, staffing concerns continue to plague various areas of care, most notably in nursing. With the average age of nurses rising into the mid-40s, retirements are outpacing new nursing school enrollments at a time when Americans are living longer — and with more chronic conditions — than ever before.

The national Institute of Health released a study which concludes that “the environment of nurses, the largest segment of the nation’s health care work force, needs to be substantially transformed to better protect patients from health care errors … despite the growing body of evidence that better nurse staff levels result in safer patient care, nurses in some health care facilities may be overburdened. For instance, some hospital nurses may be assigned up to 12 patients per shift.”
However, the nursing crunch is not a problem that can be solved overnight, Daly said.

“Once you have a recognized problem, you can’t solve it with pay raises,” he noted. “Even if you address it immediately, it takes four years to go through an educational program. We need to get more people into the supply side of nursing.”

It’s an issue with a tangible impact on patient care and safety, if recent reports — such as one from the Mass. Department of Public Health — are to be believed.
In late October, that agency reported a sharp increase in the number of hospital injuries, errors, and patient complaints in Massachusetts, and said the findings support the complaints of nurses who feel overworked in understaffed facilities.

Some nursing groups, such as the Mass. Nurses Assoc. (MNA), are using the reports as ammunition in their fight to secure passage of a bill — now before the state Legislature — that mandates minimum nurse-staffing levels in hospitals and nursing homes. Meanwhile, the Institute of Health is pushing for a reduction in nurses’ workweeks.

“Self-regulation by the hospital industry over RN staffing has been a total failure,” said Julie Pinkham, the MNA’s executive director. “As a result, patients in our hospitals are being harmed on a daily basis. We need this legislation to ensure that patients receive the care they deserve and to prevent further unnecessary harm.”
Insurance Woes

The sort of overworked environment that, unchecked, can lead to medical errors is also a fact of life in emergency rooms, as a growing population of uninsured and underinsured patients are using ERs for primary care.

That costs the hospitals millions of dollars through the uncompensated care pool, by which patients may receive free care — and which the state has gradually funded on a decreasing basis over the past few years.

“Since Mass Health was reduced last April, we’ve seen a 61{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} increase in patients with an inability to pay,” Porten said. “The quick answer is, ‘they’ll be covered by the pool,’ but the reality is that the pool is underfunded, and these patients will become the economic responsibility of the hospital. Over the years, we’ve been able to take care of these patients, but it’s beginning to jeopardize the well-being of the community hospital.”

And it’s not only primary care that these uninsured patients are seeking, but often behavioral health care as well.

“We’ve noticed more people coming into the emergency room, looking for detox beds that aren’t available in the community,” said Matt Haas, director of outpatient and crisis services in Holyoke Hospital’s partial hospitalization program.

“At times, due to the lack of resources in substance abuse treatment, people will present themselves as suicidal in the ER in order to find a safe place to stay where they can be detoxed. These people are resourceful, but they end up using resources they don’t need.”

A wide-ranging federal Medicare bill passed by Congress in November (see related story on page 17) eases the burden somewhat for the previously underinsured, with the most talked-about change being the institution of a prescription drug benefit. But critics of the bill say it’s far from perfect, and the nation’s — and the state’s — uninsured crisis promises to continue.

“There are more people uninsured today than there were five years ago, close to 45 million nationally,” Daly said. “I’m told that, on any given day, that number can inflate to 70 million because of turnover and people losing the insurance they had. It’s a much worse problem than it was five or 10 years ago.”

Getting the Word Out

Porten, like many administrators, is frustrated by the lack of positive movement coming from lawmakers. He feels the only way to effect change at this point is to get regular people involved — and to let their voices be heard in Boston and Washington.

“Hospitals need to start working with the general public in a much greater way because we’re just not getting the attention of the elected leadership,” he said.
“The public has to become more involved and set priorities for what they want in their communities. If health care is one of those things, they have to stand up and fight for health care. It’s a grim story right now, but that’s the way it is.”

To be sure, many in the health care industry in Massachusetts are more cynical now than five years ago on many issues, from insurance coverage to reimbursement. And it’s a situation that poses a troubling diagnosis for all patients.