Record Medicaid caseloads, cuts in payment rates and skyrocketing uncompensated care are putting heavy financial burdens on hospitals in Michigan and Georgia.
Two new reports on conditions in these states provide a window on the struggles facing hospital administrators nationwide.
A Georgia Hospital Association survey of 63 hospital members showed that hospitals throughout the state are feeling the effects of a troubled economy.
The survey revealed that more than six out of 10 Georgia hospitals have had to, or are currently considering, reducing staffing while more than one out of three, have had to, or are currently considering, reducing services.
The survey also showed that if Medicaid payment rates to hospitals are cut in this year’s Georgia General Assembly, those numbers jump to 73 percent and 62 percent respectively.
“The data shows that hospitals are anything but recession proof,” said GHA President Joseph Parker. “Hospitals are walking the same financial tight rope as other American businesses and are being forced to make extremely difficult decisions.”
Parker said that, with rising unemployment and loss of health insurance, the state’s uninsured population uses the hospital emergency room as a “safe haven,” because all patients are seen regardless of their ability to pay.
He noted that Georgia’s Medicaid woes have only added to the problem.
For every dollar hospitals spend treating Medicaid inpatients, the state pays Georgia hospitals about 84 cents. With the state entrenched in a budget crisis, including a $208 million deficit in its Medicaid program, many hospitals fear that another round of cuts to Medicaid this year will push them over the edge.
“Hospitals cannot continue to foot the bill for Georgia Medicaid,” Parker said. “The state made a commitment to provide health insurance to its low-income citizens. Honoring that commitment includes paying healthcare providers at least what it costs them to provide those services.”
A report by the Michigan Health & Hospital Association offers similarly dire forecasts for that state’s hospitals.
The MHA report concludes that the average total margin for Michigan hospitals in the third quarter of 2008 was negative 2.9 percent, down from a positive 2.2 percent during the same period in 2007.
Michigan hospitals also absorbed record amounts of unreimbursed care in 2008, surpassing the previous year’s unprecedented level of more than $2 billion.
The report noted that hospitals saw an 8 percent increase in uncompensated care in the third quarter of last year compared to the same period in 2007.
MHA President Spencer Johnson said that, in 2008, the state’s Medicaid caseload increased to an alarming 1.6 million people, the highest in Michigan history, based on available data.
“This crisis is compounded by the chronic underfunding of Medicaid and hundreds of thousands of Michigan residents losing their health insurance,” Johnson said. “Hospitals are now in financial peril, and the fallout will be painful.”