Hospitals statewide say decreased funding, patient visits leads to cuts

Wednesday, January 29, 2014

Editor's note: this is the third in a series on the funding challenges facing NRMC and other hospitals

By Nicole Garner.

Nevada Daily Mail

Within the last year, many Missouri hospitals have found themselves playing a numbers game.

Between staff layoffs, renegotiations on contracts and outright cuts, hospitals across the state are finding ways to stretch budgets amid financial changes.

For Nevada Regional Medical Center, $350,000 per month seems to be the winning number. According to the CEO board report for January 2014, hospital administrators are looking to save $100,000 per month in supplies expenses and an additional $250,000 in personnel costs.

In January, Nevada Regional Medical Center began eliminating employee positions, evaluating every department's cost and reconsidering supplies contracts. Thirty-eight positions were removed through layoffs, retirements or transfers. Hospital CEO Judy Feuquay said that the hospital is undergoing a "right-sizing," an evaluation that would match staff size and offered services to patient demand.

Other changes include a 10 percent rate adjustment and increased marketing to drive up revenue. Participation in a rewards program offered by Cerner, the supplier of the NRMC's newest computer program, is expected to offset the expense of the hospital's digital charting system.

NRMC administrators said the cuts and modifications were a necessary reaction to the combination of several problems -- fewer incoming patients, decreased federal reimbursement for Medicaid and Medicare services, and an increase in charity and bad debt services.

"We're very dependent upon federal reimbursement programs and volume. As our volume fluctuates, it's difficult to flex with that volume because you don't know what it's going to be, day to day," Feuquay said. "In a community like Nevada where you have a lot of self-paid, bad debt or Medicaid patients, you're affected even more so."

NRMC data shows that 58 percent of revenue the hospital received from July 2012 to July 2013 was from Medicaid and Medicare reimbursement.

Feuquay said that financial upheaval NRMC faces is not an isolated issue -- but one that's "just delayed" compared to hospitals across the state and country.

"We've been pretty fortunate that it's happened in a lot of other states a lot earlier than it's happened to us," Feuquay said. "We're going through the same thing that hospitals all across our state are. It's easy to say that, but it's difficult to deal with."

She said that hospitals everywhere are being impacted by cuts to Medicare and Medicaid implemented by the Affordable Care Act and fewer patients walking through hospital doors to seek care.

"No other viable solutions"

A Monday press release from Mercy Hospital in Fort Scott, suggested similar financial constraints to NRMC. According to the hospital's communications department, the facility worked "diligently for the past several years to manage the impact of declining patient volumes and reimbursement and regulatory challenges."

Mercy's next move mirrors changes made at NRMC in the past month. Twelve employee positions were eliminated at the Fort Scott hospital and surrounding clinics, with an additional 17 jobs cut at Mercy facilities in Independence, Kan. Some positions were already vacant, and will not be filled.

The statement said that hospital administrators had "no other viable solutions" to explore beyond the layoffs. Mercy employees who received layoffs received severance packages and assistance in finding new jobs.

Just north of Kansas City, Mo., Liberty Hospital faced similar problems last spring. In an effort to slice $20 million from its annual budget, Liberty Hospital shut down some services, such as a wound clinic. Between January and May of 2013, nearly 330 jobs at the Liberty, Mo., hospital were eliminated through layoffs, retirements and removal of vacant positions.

And layoffs continue down south and to the east of Nevada. Ozarks Medical Center in West Plains, Mo., cited changes in federal reimbursements as a primary reason for eliminating 32 employee positions in June 2013. Hospital administrators also took a five percent pay cut and reduced employee hours to combat declining revenue. St. Louis' Barnes Jewish Hospital let go of 160 workers last June. Administrators there said decreased patient volume and hospital stays have caused a kink in incoming revenue.

Cuts across the state, across the board

Dave Dillon, vice president of media relations for the Missouri Hospital Association, said that Missouri's hospitals are experiencing significant funding cuts in a variety of ways. Of the 154 Missouri hospitals in the organization -- "in essence, every hospital," Dillon said -- most are facing significant funding cuts, regardless of size or location.

"This is not one type of hospital -- suburban, urban or rural. Everyone is feeling the pain. The decimal point may change per facility, but the pain is fairly equal," he said.

Dillion said that changes to Medicaid reimbursement caused by the Affordable Care Act have and will continue to impact hospital budgets. Rural areas and inner city areas are in a more difficult position because the number of individuals relying on Medicare and Medicaid is higher. Unlike larger metropolitan areas, there's no large population of patients with private insurance to offset funding problems.

"In every hospital board room, they're looking at the numbers being produced from lost revenue. And I think they're all scratching their heads, wondering how the numbers will work if they don't have offsetting revenue from Medicaid," Dillion said.

Dillion said the inability to offset shrinking federal reimbursement -- which is currently only 55 cents per dollar -- can disproportionately hurt hospitals with smaller surrounding populations. He sees rural hospitals, especially those in difficult financial positions, in jeopardy of making more cuts to staff and service, or closing their doors altogether.

What's next?

NRMC's Feuquay said that there's no plan for the hospital to close down or leave Nevada. She said the future of the hospital is to stay within the city, serving residents who would possibly have to drive further for medical attention.

And at Fort Scott's Mercy Hospital, administrators do not expect further cuts to staff anytime soon.

But Dillion said that discussion about how the Affordable Care Act affects hospital finance is necessary. He said that many hospitals are "on a bubble," and that the next few years of reimbursement cuts and low patient visits could affect a hospital's future.

The numbers game hospitals are playing, whether it's cuts to staff, budget or supplies, is all about the ability to juggle where revenue will come from.

"It's a delicate balance this year," Dillion said. "That's where we are."

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