Each year, Missouri hospitals are putting more skin in the health care game – and the future calls for more investment, according to the Missouri Hospital Association.
In its most recent community investment report, the association found 133 hospitals across the state provided $680 million in charity care in 2012, up 9 percent compared to 2011 and 32 percent since 2010.
When bad debt is considered, the hospitals report covering $1.17 billion in uncompensated care in 2012.
According to the MHA, Missouri hospitals, including Springfield entities CoxHealth, Mercy Hospital Springfield, Lakeland Behavioral Health and Ozarks Community Hospital, invested an estimated $2.5 billion coupled with health care investments, such as free clinics and educational costs.
Beyond free care and services, Show-Me State hospitals are an important economic driver.
The MHA estimated health care providers in the state employed more than 123,000 workers and collectively spent $1.5 billion on capital improvements.
Springfield-based CoxHealth managed nearly $143 million in uncompensated care, free services and related investments in 2012, while Mercy Hospital Springfield oversaw $162.4 million. Additionally, the two systems have devoted another $300 million in recent and planned projects between a new patient tower coming to Cox South Hospital, the newly opened Mercy Orthopedic Hospital, the Mercy Rehabilitation Hospital and planned clinics in Branson.
“I don’t think most people realize what an economic driver hospitals are,” Missouri Hospital Association spokesman Dave Dillon said. “In many communities, they are the largest employer.”
In Springfield, Mercy and CoxHealth rank Nos. 1 and 2 in local employment – 9,004 and 7,891, respectively – according to Springfield Business Journal list research.
Dillon said those economic engines face steep challenges.
With federal cuts to Medicare and Medicaid programs kicking in via the Affordable Care Act, Dillon said MHA estimates hospitals statewide are losing some $4 billion in reimbursements through 2019.
“What the ACA did was envision where there’d be cuts to hospitals in both the Medicare program and the disproportionate-share hospital payment program to help pay for the new enrollment of Medicaid and subsidized payments on the exchanges,” Dillon said. “We know those cuts are coming. What we are hoping for is additional coverage, since it is being paid for.”
Jake McWay, senior vice president and chief financial officer for CoxHealth, said as reimbursements go down, costs naturally shift to insurers and paying customer.
“It is an enormous, almost hidden tax that exists in our country. Everybody who can pay is paying a piece of it. It’s unfortunate,” McWay said. “I think there is limited awareness. I don’t think people fully understand because they don’t see this directly being built into their commercial insurance rates.”
Even as CoxHealth builds for anticipated demand with population growth and baby boomers aging, McWay said roughly 150 jobs were lost through attrition in the past year as the system faces federal program cuts. Already, he estimated not expanding Medicaid in 2013 is costing CoxHealth $1 million a month this year.
Dillon said Medicaid funding expansion was designed to offset the federal cuts, but Missouri lawmakers leery of supporting health care reforms and growing the government insurance program have so far chosen not to accept an estimated $2 billion per year in expansion funds.
Sen. David Sater, R-Cassville, who was a co-chairman of the Senate committee that reviewed and effectively defeated Medicaid expansion in 2013, has said the Medicaid program needed its own reforms before expanding it.
Dillon said turning down federal funds directly hurts Missouri’s economy, which is why some 60 chambers of commerce across the state support Medicaid expansion in some form, including the Missouri Chamber of Commerce and Industry, which recently hired former U.S. Sen. Kit Bond to lobby for Medicaid expansion. State governments in Arkansas and Iowa have received waivers in the past year to use expansion funds to help qualified individuals purchase private insurance, and Dillon said Missouri lawmakers also should consider that option.
“For hospitals on the financial bubble, they are going to have to make decisions whether to potentially affiliate with someone with more resources and/or whether they can stay open,” Dillon said. “If we do not at some point turn the corner on the cuts versus coverage question, then it is going to be very difficult for a lot of hospitals – and a lot of rural hospitals – to stay open.”
He said rural hospitals typically have a higher percentage of Medicare and Medicaid patients.
Mercy Hospital Springfield President Dr. Robert Steele said total uncompensated care at Mercy comprises more than 5 percent of its annual operating budget. By comparison, the nonprofit has a goal to reinvest its net assets – roughly 4 percent of its annual revenue – into operations each year.
He said Mercy has worked hard systemwide to implement best practices through its integrated network as a way to realize savings. Mercy Springfield Communities, which established electronic medical records nearly a decade ago, has three times been named the top Integrated Healthcare Network nationwide for its integrated management system by Modern Healthcare magazine. Steele said Mercy has no plans to close doors due to Medicaid and Medicare cuts, but other caregivers might not be in the same position.
“Where I’m concerned is that hospitals across Missouri are not in a position to absorb the kind of hits that are coming,” Steele said.
McWay also expects hospital closures or consolidations on the horizon, and he said CoxHealth didn’t expect to close any facilities in reaction to cuts. As of now, smaller facilities such as Springfield-based Ozarks Community Hospital plan to stay the course and attempt to absorb the cuts.
“The cost of uncompensated care has not been a major factor in the recent economic challenges we face at OCH,” said CEO Paul Taylor, via email. “It is the reductions in reimbursement from Medicare and Medicaid that present our greatest challenge. Those reductions were supposed to have been offset by an increase in the number of patients covered under Medicaid, but Missouri has stubbornly refused to expand Medicaid.”
Taylor said the hospital projects Medicaid and Medicare cuts will reduce payments by about $8 million during the next few years.
At least eight bills related to expanding the state’s Medicaid program have been filed in the House and Senate -– three in the Senate and five in the House – as of press time. However, Dillon said two key lawmakers who are experts on the subject, Rep. Jay Barnes, R-Jefferson City and Rep. Torpey, R-Raytown, have yet to file legislation on the subject.
“There are other models being tried. I actually think it is very smart to not just accept the federal solution that is out there,” McWay said. “Some other states have explored those and received waivers to pursue those. I’m hopeful there are minds in the legislature that are thinking the same way.”
Features Editor Emily Letterman contributed to this story.[[In-content Ad]]
