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ER costs, Medicaid cited in KDMC cuts

The decision Tuesday to release 40 employees at King’s DaughtersMedical Center in the next few weeks came after considerable study,but one of the root causes behind the layoffs is one the hospitalhas dealt with for years, officials said.

KDMC Chief Executive Officer Alvin Hoover said approximately 90percent of the “bad debt” that led to the workforce reduction isthe result of an increase in uninsured patients admitted to theemergency room. He said the hospital’s non-recoupable expenses fromsuch ER admissions have caused bad debt to grow from an average of5 percent of the hospital’s gross revenue to as much as 10 percentover the last five years.

“Used to, you’d always have a few people come in withoutinsurance,” Hoover said. “That number is growing because of theeconomy we’re in.”

There is nothing Hoover or any hospital administrator can do toreduce the number of uninsured patients admitted to the ER.Hospitals are legally required to admit all ER visitors, and thereare some who take advantage, using the ER as a free doctor’soffice, he said.

Hospital procedures call for ER patients to be admitted andtreated – placed in stable condition at the least – before anyhospital staff checks on their ability to pay for services, Hooversaid.

“We never ask for a Medicare card or an insurance card until wehave them in the back and stabilized,” he said. “If you’re sickenough to be admitted [but have no insurance], that means I admityou into the hospital, treat you for a couple of days, release youand never see a dime for it.”

Hoover lamented Gov. Haley Barbour’s efforts to trim the state’sMedicaid rolls as one of the causes of the recent increase inuninsured patients. The governor has worked during hisadministration to tighten Medicaid’s qualifying criteria afterformer Gov. Ronnie Musgrove expanded the program. Barbour spentmuch of 2008’s protracted legislative session trying to cut theprogram to reduce a $90 million funding shortfall.

“In Mississippi, we can send $100 to the federal government andget $300 back, but our governor has said we’re going to send $50 upand let them send us back $150,” Hoover said. “That’s foolish, man.Say they cut 20 percent of the program and increase the number ofuninsured by that many people. That’s that many more people whocan’t afford to pay, and who has to pay for that? Thehospital.”

Mississippi Hospital Association Vice President of Finance/ChiefFinancial Officer Mike Bailey said his organization, whichrepresents 118 hospitals around the state, is preparing to fightthe Medicaid battle again during the 2009 legislative session tostop any further attempts to reduce the program’s rolls or cut itsfunding.

“Taking a person’s Medicaid card away from them is not going tostop them from accessing the hospital,” he said. “It simply movesthem from a position of lesser cost like a doctor’s office to oneof higher cost like the ER.”

Bailey described attempts to reduce the size of Medicaid asputting a “hidden tax” on hospitals, saying it effectively stopsthe federal government’s 75 percent payment and pushes it to thelocal level – hospitals.

Bailey said approximately 60,000 people have been trimmed fromthe rolls over the last three years. He said there is a directcorrelation between the amount of Mississippians removed fromMedicaid rolls and the increase in uninsured patients visitinghospitals.

The average amount of bad debt among the state’s hospitals is 12percent of revenue, Bailey said. KDMC’s 10 percent bad debt isunder the state average, but there are other factors thatcontributed to the hospital’s layoffs that are less obvious, hesaid.

Bad debt doesn’t include Medicare and Medicaid patients who areunderinsured, Bailey said. Speaking theoretically, he said sometreatments may cost a hospital $1 and Medicaid will only compensate87 cents.

“KDMC has been one the more successful hospitals,” Bailey said.”They’ve done a really good job of making the best out of what theyhad, but there’s only so much that a hospital can do.”

Uninsured and underinsured patients have had a crippling effecton Mississippi’s healthcare system, Bailey said. Citing an AmericanHospital Association survey, he said Mississippi was seventhnationally in the category of most profitable hospitals three yearsgo. The most recent set of numbers from the survey puts the stateat 49, he said.

With the national economy predicted by many to get worse beforeit gets better, local legislators are preparing to go to bat forthe state’s hospitals as they debate Medicaid again in 2009.

“We have been talking about a downturn in the economy, but boydid it ever hit home today,” District 39 Sen. Cindy Hyde-Smith saidTuesday night. “Obviously, we’re not immune to it.”

Hyde-Smith is getting an early start on the legislative sessionby meeting with Division of Medicaid Executive Director Dr. BobRobinson. She said she would discuss cost saving measures for theprogram, and her immediate concern is examining Medicaid’sreimbursement formula to make sure hospitals are paid in a timelymanner.

District 92 Rep. Becky Currie is also gunning for the formula,which she said unevenly distributed Medicaid reimbursements. Ifdiscussions don’t work, she is ready to introduce legislation.

“If we have to pass legislation for Medicaid to submit a betterformula, then we’ll have to pass legislation,” she said. “We havetaken this formula to the chairman of public health in both theSenate and the House, and we’re going to make sure that it’schanged.”