Hospital executives returned to the General Assembly Tuesday to walk the halls and promote their plan for reforming Medicaid.

By Rose Hoban

After years of cuts to their Medicaid reimbursements, increased assessments by the state government and shrinking clout at the General Assembly, executives from the state’s hospitals came to Raleigh Tuesday to promote their plan for Medicaid and talk to legislators.

Close to 300 CEOs, nursing directors, nurses, doctors and other hospital employees roamed the halls on Jones Street, heading into legislators’ offices and showing off some of their newest pieces of technology.

But primarily, they were there to make the case that their institutions are doing a lot to improve health care across the state.

“We need to be innovative, we need to look at different ways of doing things,” said Michael Lutes, CEO of the Carolinas HealthCare System hospital in Anson County.

Lutes and others were hoping to convince lawmakers that they were ready to be partners with the state to reform the system and get back on an even financial keel.

WakeMed nurse David Crosby showed off some of the new technology being used at the hospital to provide care and train nurses.
WakeMed nurse David Crosby showed off some of the new technology being used at the hospital to provide care and keep nurses up to date. Photo credit Rose Hoban

Cody Hand, lobbyist for the North Carolina Hospital Association, said one of the tasks for the day was to thank House lawmakers for not putting more cuts to hospitals into their Medicaid budget.

“The House budget recognizes that Medicaid needs to transform, and providers can’t do that with continued cuts,” Hand said. “It’s a fairly responsible and rational budget.”


Transformation was a big theme of the day, with one of the courtyards in the General Assembly building filled with tables and exhibits of new ways of meeting patient needs.

Nurse David Crosby from WakeMed Health & Hospitals showed off a teaching mannequin and a portable respirator at a table right outside the office of Senate Health Care Committee Co-chair Louis Pate (R-Mt. Olive).

Crosby also talked about WakeMed’s agreement with Wake Tech Community College to get young associate degree nurses to the bedside.

“Students do an early college while they’re in high school, so junior and senior year typically most of their classes, if not all of them, count towards college credit,” Crosby said. “And with the nursing program, they can start clinicals once they’re 18.”

The transformations also extend to how hospitals are built and how they deliver care.

“Our model that we’d been delivering for a number of years just wasn’t working,” Lutes said. “So what we wanted to do before we built a new facility was really redesign the care model.”

He described how his institution reconfigured itself from a traditional full-service hospital to a facility with only a few beds, plus ambulatory care clinics and an emergency department for more acute patients.

He said the new facility was about to celebrate its first anniversary and he was looking forward to presenting data showing they’d reduced overuse by some chronically ill patients.

“We had one particular patient who had visited the emergency about 14 times during the last year at our old facility,” said Lutes. The woman had several chronic diseases.

“When the new facility opened, she visited us about three weeks into the facility,” he said. “We got her into our patient-centered medical home to do the follow-up care she needed. Now, over the last nine months, she’s only come to the emergency department one other time.”

Medicaid plan

The biggest transformation hospital executives wanted to talk about was their recent proposal to reform Medicaid by creating “provider-led entities” made up of doctor groups, hospitals and other health care providers. These PLEs would eventually get paid a set fee from the state for each Medicaid patient, and in return they would guarantee a predetermined level of quality and satisfaction for patients.

The hospitals’ plan would also exclude out-of-state managed care companies from being part of the mix.

“Lawmakers can have the budget certainty they need and we can have a little more control over the risk that we are already providing and already assuming,” Hand said of the plan.

“I think the health care systems around the state are willing to step up and have a local North Carolina solution to Medicaid reform,” said Lutes, pointing to his organization’s early success in Anson County.

Certificate of need

Other CEOs said they were talking to lawmakers about preserving the state’s certificate of need laws, a sprawling and complicated regulatory regimen that limits the amount of health services available in the state as a way of controlling costs and reducing overuse in health care.

Southeastern Regional CEO Joann Anderson said she worries that changes to certificate of need laws would undermine her hospital's financial stability.
Southeastern Health CEO Joann Anderson said she worries that changes to certificate of need laws would undermine her hospital’s financial stability. Photo credit: Rose Hoban

Several proposed bills would significantly change certificate of need laws: one would eliminate it altogether and another would allow for the construction of freestanding ambulatory surgical centers that would be unaffiliated with hospitals.

CEOs such as Joann Anderson, head of Southeastern Health in Robeson County, expressed fear that allowing the ambulatory surgical centers would undermine her hospital’s income. In 2013, Southeastern had revenues of about $270 million. But after paying all its expenses, it had only about $5 million left over.

“That’s what we have to reinvest in the organization, to be able to give our pay raises for our employees, afford benefits for employees, to be sustainable,” Anderson said.

She fretted that independent orthopedic or ophthalmic surgery centers would pull away some of their best-paying patients and said that losing the revenues from those well-reimbursed services would make it harder for her institution to support loss leaders such as maternity services and the emergency department.

“We have a huge network of physicians, and our physician practices lose significantly every year,” Anderson said. “They contribute to the overall organization. But if you just look at that entity of its own, it’s a loss leader for us.”

“But it’s an issue of access to care, so we feel we need to do that.”

Anderson said about three-quarters of the patients at Southeastern Health are either Medicaid or Medicare recipients, which have low rates of reimbursement, and another 10 percent are uninsured altogether.

“So if Medicaid takes a huge hit and the certificate of need goes away, that would strip us, basically, completely, and leave us deciding what services not to provide,” she argued.

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