HEALTH CARE REFORM: FINDING BALANCE AND PRESERVING SAFETY NET HOSPITALS
Tuesday, March 08, 2011
HEALTH CARE REFORM: FINDING BALANCE AND PRESERVING SAFETY NET HOSPITALS
This appeal from Wendy Z. Goldstein, president and CEO, appeared in the February 24 issue of The Home Reporter
Our nation's health care system is a complicated ecosystem, and right now that ecosystem is severely out of balance. Leading experts all agree it needs to be restructured. From health care reform at the national level to the governor's recently convened 27-member Medicaid Redesign Team (MRT), the complicated but necessary task of righting our health care system is underway.
While every hospital should brace for massive and painful cuts (the MRT is tasked with cutting $2.85 billion from Medicaid in New York by March 1) one thing is for certain, those that will bear the greatest impact are safety net hospitals like Lutheran Medical Center.
First, in order for there to be real reform, we need to recognize the critical role safety nets play and to have an agreed upon definition of what a safety net hospital is. And secondly, there are large but little discussed consequences of the Affordable Care Act that burden safety nets far more than others. Yes, there needs to be reform, but not on the backs of these hospitals; they simply will not survive restructuring that does not pay close attention to their unique needs.
Many people define a community safety net as a fragile, poor performing hospital, or a public, city-operated hospital. That is not exactly accurate. Safety nets are more closely defined by who they serve and the unique challenges those populations present.
Safety net hospitals exist in neighborhoods with challenging demographic conditions, with poorer underlying health status and higher hospitalization rates. They have a significantly lower percentage of higher-paying, commercially insured patients than other hospitals. This puts them in a precarious financial situation because of the amount of free (charity care) and under-reimbursed Medicaid services they deliver. While other hospitals can offset these costs with their privately insured patients' reimbursements, safety nets do not have that advantage. In addition, safety net hospitals also have extremely limited access to capital, making infrastructure investments that would greatly contribute to their sustainability a tremendous challenge.
Most hospitals in N.Y.C. average less than 2.5 percent in charity care, while Lutheran's average is eight percent. Additionally, on any given day Medicaid accounts for 46 percent of Lutheran Medical Center's admissions compared to, on average, 34 percent for other voluntary hospitals in New York City.
The Affordable Care Act made significant changes to the Medicare and Medicaid Disproportionate Share Hospital (DSH) payment system. At one time, safety nets could count on this governmental support that was specifically set aside for hospitals that cared for a disproportionate share of the poor, under-insured and uninsured. Those funds are no longer available. Additionally, even after reform New York hospitals will continue to care for a uniquely large undocumented population, a population the health reform law specifically does not address. In essence, the safety net is being ripped apart.
Operating a fiscally viable high quality safety net is an extreme challenge. Lutheran has done this consistently and our efforts have been recognized five years in a row by Cleverly+Associates as a Community Value Index Top 100 Hospital, for providing high quality care in a cost efficient manner.
Lutheran has endured $20 million in cuts over the last three years already. The target for the MRT is set at $2.85 billion. If that target is met, Lutheran is looking at a minimum of another $9 million in cost reductions. Sadly, the changes that have been recommended to date don't include relief for safety nets.
New York's safety net hospitals simply will not survive without a comprehensive policy agenda to stabilize and sustain them over the short and long term. Any restructuring must pay close attention to the precarious conditions under which these hospitals operate, especially safety nets like Lutheran that are their community's largest employer and major provider of care for everyone, not just the poor and uninsured.
Please call or write your state elected officials and ask them to save our safety net hospitals. It is imperative that we continue to educate lawmakers and community leaders on the dire straits high value community safety nets face.
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