HOSPITAL REIMBURSEMENTS: Medicare Cutback Pain Widespread
Sunday's Chicago Tribune reported that metro Chicago's prestigious teaching hospitals are feeling acute pain from Medicare cuts, with workers facing job loss at the area's top five centers. Chicago's big five -- Rush-Presbyterian-St. Luke's, University of Chicago, Northwestern Memorial Hospital, Loyola University Medical Center and the University of Illinois-Chicago health systems -- have largely been protected from widespread mergers, job losses and drastic cutbacks by a "largely fragmented" insurance industry and lower-than-average managed care penetration -- only 25% of local residents are enrolled in HMOs. The Tribune reports that without "pressure from managed care to keep Chicago consumers out of hospitals, acute-care hospitals here have remained bloated with beds and staffing. ... In fact, Chicago has more acute-care capacity than practically every major metropolitan area in the country," higher even than notoriously crowded markets such as New York, Boston and Philadelphia. University of Chicago Hospitals CEO Ralph Muller said "it's only a matter of time before academic medical centers here will be swimming in red ink like those in other parts of the country" (Japsen, 4/25).
The Nebraska Association of Hospitals and Health Systems says that a projected $75.2 million in decreased annual Medicare funds will have a devastating impact on the state's rural hospitals, which rely on Medicare for 60% to 80% of their income. NAHHS Chair Cindy Bradley, also the CEO of Great Plains Regional Medical Center, said, "I don't think a lot of people in the health care field really understand how deep the cuts will be." Association President Harlan Heald said that the cuts will be hardest on rural facilities that rely on outpatient revenues, as the reimbursement cuts are more severe in that area. "Some small rural hospitals will have to look at options such as consolidating services with other facilities," he said ( AP/Lincoln Journal-Star, 4/23). In Kansas, Sen. Pat Roberts (R) and Rep. Jerry Moran (R) argue that the damage already done under the 1997 Balanced Budget Act would worsen "under cuts proposed this year by the Clinton administration." Moran said, "It's clear to me that what happened in 1997 is exactly what we predicted: Rural hospitals are paying the price. If we are unsuccessful in getting something passed soon, and soon ought to be in 1999, it becomes too late for some hospitals" (Quaid, AP/Wichita Eagle, 4/25).
The AP/Jackson Citizen Patriot reports that despite that fact that hospitals "are struggling to stay financially healthy in the face of drastic Medicare cuts ... four out of five hospitals are performing as well or better than expected in caring for patients," according to the Michigan Hospital Report, released last week by the Michigan Health and Hospital Association. Ninety percent of facilities had patient death rates no higher than expected, with 72% patients discharged "within the expected time period or sooner." Still, hospitals' operating margins are "not remaining steady," dipping 2.7% in 1997 (Todaro, 4/23).
Kondracke Takes on Frist
In a Philadelphia Daily News op-ed, Roll Call Editor Morton Kondracke says teaching hospitals fear that Sen. Bill Frist (R-TN) is intent on "slash[ing]" their budgets. He writes that as the chair of the National Bipartisan Commission on the Future of Medicare's graduate medical education task force, Frist backed a proposal to move "a large chunk of the federal [GME] subsidy out of Medicare, where the funding level is guaranteed, to the congressional appropriations process." Kondracke argues that if such a measure succeeds, GME "would get thrown into the same appropriations bill as federally funded medical research, another source of funding for teaching hospitals, and they would be competing against themselves for money," and appropriations would be subject to the whims of year-to-year budgets. Frist counters that "Medicare will be increasingly squeezed in the future by managed care," and that GME should be a "mandatory appropriation," but Kondracke predicts that inaction on Medicare reform will mean that "teaching hospitals will continue going broke" (4/22).