The once “recession-proof” healthcare industry continues to struggle, with hospitals laying off additional workers, health systems enduring investment losses, and states seeing their Medicaid rolls grow.
While legislators at both the national and state levels appear to be serious about reform, necessary changes are slow in coming, while healthcare organizations – and the patients they serve – are hurting.
Payment reform efforts have not yet yielded fruit, and are not guaranteed, even with a legislative and executive branch of the same political party. Congress increased the federal Medicaid match in the stimulus bill, but there is no certainty that Medicaid or Medicare reimbursement policies will improve.
And sadly, the need is as great as any time in recent memory.
For instance, the Colorado Department of Health Care Policy and Financing recently revealed that more state residents are covered by Medicaid than at any time in the program’s 40-year history. The number of Colorado residents receiving Medicaid benefits rose to 457,699 in April – an increase of more than 9,000 from the previous month and 72,597 from the same time last year.
John Bartholomew, chief financial officer for the department, said the rise is directly related to economic conditions.
As I write in late May, state budget negotiations have stalled in the state of Maine, and the Department of Health and Human Services has sent out a notice indicating that it has run out of money to pay MaineCare providers.
Many healthcare providers have indicated they won’t be able to meet payroll and may have to stop providing critical services to seniors, people with disabilities, and low-income families with children.
Threatened by major recession-driven budget cuts, the state of Washington moved in April to lower its Medicaid prescription reimbursement rates to drugstores. The state wanted to drop the rate to 80 percent, claiming it was needed to save about $13.4 million a year.
However, a federal judge recently blocked the change, ruling that it would reduce the quality of care for Medicaid beneficiaries. The prescription reimbursement rates proposed by Washington would have been the lowest levels nationwide.
The state has since indicated it will continue to pay 86 percent of the average wholesale price on name-brand drugs for Medicaid prescriptions through at least July 1.
Former hospital employees may be applying for Medicaid coverage themselves, as many hospitals shed jobs in order to weather the economic crisis.
The Loyola University Health System in suburban Chicago plans to cut more than 440 jobs, or about 8 percent of its work force, as a result of the recession and an increase in patients who cannot pay their medical bills. The health system’s charity care expenses increased to $31.3 million from $18.1 million for the nine-month period ending March 31.
The cuts at Loyola will be across the board, including 31 nurses, managers and staff. Of the 443 positions, 372 are from the medical center and 71 are from the medical school. The health system has said the cuts would reduce expenses by $21 million.
Without the work force reduction, Loyola faced the prospect of a year-end loss that would exceed $50 million.
Meanwhile, the well-regarded Park Nicollet Health Services in St. Louis Park, Minn., has eliminated more than 490 jobs in the past six months, primarily as a result of its diminished investment portfolio, a decline in patient volume, bad debt and cuts in reimbursement.
Clearly, Congress cannot by itself resolve the economic crisis, but federal intervention is necessary to address short and long term damage to the faltering U.S. healthcare system.