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By Rose Hoban
With Congressional repeal of the Affordable Care Act looming, the word “uncertainty” has gotten a lot of use in policy circles in recent months.
Advocates of repeal say it will be an improvement over the ACA, while defenders of the 2010 health law paint a dire picture of what could come next. Health organizations large and small are feeling apprehensive, wondering what will happen in Washington.
Executives in rural hospitals, where the cost of uncompensated care continues to grow, are finding it hardest to predict their futures.
Even though more people in his community have been able to buy coverage on the health exchanges established by the Affordable Care Act, Murphy Medical Center CEO Mike Stevenson said his institution still has too many people who can’t pay.
“Our uncompensated care for last year was over $14 million, that’s for a service population” of about 44,000 people, said Stevenson.
The hospital’s overall gross revenue was about $185 million, about two-thirds of which was for patients with Medicare, Medicaid and who are under managed care, all of which pay less than commercial insurance. None of those programs cover all of the costs listed on a patient’s bill.
Stevenson said after all the adjustments downwards, his institution’s final revenue was around $58 million and expenses were $63 million, leaving the hospital in the financial hole. There’s no margin for any extras, such as new equipment, repairs and an emergency fund.
Rule of thirds
“In North Carolina for years and years and years, it’s been a third, a third, a third,” said Jeff Spade, who analyzes rural health care policy for the North Carolina Hospital Association. “A third are losing money, a third are about break even and a third are making it.”
Spade said that for rural hospitals, the biggest problem is serving the uninsured.
Before implementation of the Affordable Care Act (often called Obamacare), about 21.5 percent of North Carolinians lacked any health insurance and more than a million people were on Medicaid, the state and federally funded program that provides care for uninsured children, some of their parents, people with disabilities and poor seniors.
After implementation of the law in 2012, that rate started dropping. By the end of 2015, that number had dropped to about 15.6 percent, according to National Center for Health Statistics data released in May 2016.
Nationally, the rate of uninsured was about 10.5 percent in the same report. In states that expanded Medicaid, the rate was generally lower.
Other states’ rates dropped lower because they expanded the Medicaid program to cover many low-income working adults and other people who were above the federal poverty level, but who did not make enough money to get insurance premium subsidies under the ACA.
In North Carolina, that didn’t happen. The General Assembly has staunchly resisted expanding the program to cover between 350,000 and 500,000 additional people.
Uninsured folks in his community who would have benefitted from expansion still show up at the door of Murphy Medical Center, Stevenson said. To care for them, he ends up charging more to the paying patients.
“Because of the way the system has evolved with cost shifting, because if I don’t get paid by one patient, you have to up your prices to those who do,” said Stevenson, a trained accountant with a head for numbers. “In my opinion. It’s just so perverse.
“It’s a good reason why the system needs to continue to be reformed.”
Demographics, geography are destiny
One problem in many rural communities is that the people there tend to be older, sicker and more likely to be uninsured or on a government-paid insurance plan, such as Medicare, which provides care for people who have disabilities or are older than 65-years old, said Mark Holmes, a health economist at UNC Chapel Hill who focuses on rural health policy.
“The industry of health care services is changing, fewer things need to be done on an inpatient basis,” Holmes explained. But those inpatient services pay better and support a hospital staying open better than outpatient services.
Stevenson said there’s lots of talk about having the free market take care of the problem of health care financing, but he pointed out that doesn’t really work so well when you’re the only game in town.
“We are in a three county area, but we’re also within 25 miles from across the [state border],” he said. “We have competing neighbors across state borders, so people can travel and if there’s enough of a savings on a CT scan, someone can save a few hundred dollars… it’s worth it for them to travel 50 miles through the mountains to a privately held CT imaging center.”
But when it comes to immediate care, such as for appendicitis or a heart attack, it’s a different story.
“We’re here 24, seven and we take care of the indigent patients,” Stevenson said. “If I didn’t have to give away care and didn’t have to have bad debts and didn’t have to have people on call nights and weekend my costs would be lower and I could charge lower prices.
“When people argue about letting the free market reign, that’s fine if it’s a totally even playing field.”
More questions than answers
Meanwhile, there hasn’t been much movement policy-wise since the November election, Spade said.
“We’re still waiting for a secretary,” said Spade. Since speaking to NC Health News on Feb. 7, Congress has approved Georgia Rep. Tom Price as the Secretary of Health and Human Services.
At the state level, Gov. Roy Cooper has been engaged in a tug-of-war with legislative leaders over whether or not lawmakers will have the power to approve or nix Cooper’s choice for North Carolina’s HHS secretary. That issue is making its way through the court system.
Spade, Holmes and Stevenson all said the gridlock at the state and federal levels means no one can plan or make decisions.
“We’re going to be waiting to see,” Spade said.
Meanwhile, Stevenson has put out a request for proposals for Murphy Medical Center to be absorbed by a larger hospital system.
“As much as we hate to lose our independence… we’re one of those hospitals that has become at risk,” Murphy said. “We hate it more than anything, but we have to look into the future of how we’re going to deliver care and I don’t think we can do it in the model that we’re in today.”