Businesses hear ills over health law
Published 9:50 pm Friday, October 15, 2010
Premiums are going up. Coverage is going down. And the mostradical changes mandated by national health care reform are stillmonths and years away.
Just the specter of the coming adjustments mandated by the PatientProtection and Affordable Care Act has been enough to jeopardize analready unbalanced relationship between insurance providers andhospitals.
And that arrangement is sure to slide as the new law’s provisionscome online, King’s Daughter Medical Center representatives saidThursday. Speaking to a sampling of Brookhaven’s business andindustry leaders at a luncheon for local employers, hospitalofficials demonstrated the growing financial disconnect between thetwo parties and predicted increased gaps in the near future.
“Some years Blue Cross/Blue Shield has had 10 percent increases intheir premiums, but they only provided us with a 2 or 3 percentrate increase,” said Alvin Hoover, the hospital’s chief executiveofficer. “What happened to your premiums? They didn’t go to improveyour health care, I promise you that.”
Armed with an array of charts and graphs, Hoover and other hospitaladministrators demonstrated the trends of health care costs andinsurance provider rates over a period of several years, showinghospitals’ business costs steadily increasing while provider ratesdanced around consistently low numbers.
According to the hospital’s figures, health care costs have risen26 percent since 2007, while provider rates paid to hospitals wentfrom 2 percent to 3.3 percent during the same time. Insurancepremiums for employers over that timeframe have increased almost200 percent, officials said, standing at annual costs of roughly$4,800 for individuals and $13,300 for family coverage thisyear.
“Where are your premiums going?” Hoover asked the roomful of localleaders. “It’s not going to hospitals.”
In the coming years, the difference between premium costs andpaying rates will only get worse, KDMC Chief Financial OfficerRandy Pirtle predicted. The stand-alone hospital – without thepower of a regional system to back it up – already has a tough timeduring annual insurance negotiations, and insurance companies willuse the uncertainty of health care reform as a crutch to refuse afairer arrangement, he said.
“But when you (business leaders) sit down with them, you can ask,’Why are we getting an 18 percent increase? We just had a meetingwith KDMC, and they’re not getting a rate increase,'” Pirtle said.” The pockets are being stuffed with insurers in this case.”
Of course, the entire affair will result in costs being passed downto the health care consumer, officials agreed. Employers will haveto pass on their higher premiums, and hospitals will have to makeup the losses incurred through unsatisfactory rates.
So far, KDMC has been competitive in attempting to keep health carecosts down, Pirtle pointed out.
Highlighting his many charts and displays, the financial officershowed the Brookhaven hospital’s average charge per admission is$15,407, compared to the Mississippi average of $24,611. KDMC alsocosts thousands less than other state hospitals in severalcategories, including general medicine, where the local cost isaround $7,000 less than statewide expectations.
Additionally, KDMC ranks third among all 123 facilities nationwidemanaged by Quorum Health Resources, the Tennessee-based companythat employs Hoover and Pirtle. The hospital manages those numberswhile operating with about 10 percent of annual revenue written offfor bad debt – uninsured patients.
KDMC officials proudly touted their track record on costs, butwhat’s true in life is true with hospitals – it can always getworse. Hoover fretted the year 2014, when insurance exchanges areset up under the new health care act.
“What rate will they pay? The assumption is the exchanges will payan insurance rate. What you hear now is that hospitals are going tohave to learn to operate on Medicare rates,” he said. “Well,Medicare rates are break-even rates. How are you going to makeenough money to buy new equipment or hire new employees?”
Toward the end of the presentation, a businessman in attendancesolicited Hoover’s overall opinion of health care reform, “on ascale of one to 10.” Hoover was torn between choosing two orthree.
“This is not health care reform, this is a payment reform plan withno one to pay for it,” he said.