Bill Pully: Hospital profits already gone

March 25, 2013 

Hospital profits already gone

In response to the March 19 editorial “Scalpel to profits”: The “profit-ectomy” you seek for hospitals has already been accomplished by two government decisions, one by Congress and one by the state. You championed one, lambasted the other.

The federal Affordable Care Act is adversely affecting North Carolina hospitals. Reductions in hospital Medicare payments funded ACA’s expansion of health insurance. The ACA will cut $5.6 billion in North Carolina hospital Medicare payments over the next decade. Medicare pays for more than half of the patients in most N.C. hospitals. Other Medicare funding reductions, including sequester cuts, push the total payment losses for N.C. hospitals to $7.8 billion. Hospitals already lose money caring for Medicare patients. Rate cuts are already occurring and heighten hospital losses. You championed this legislation.

Expanded health insurance coverage was intended to offset the Medicare cuts. The state’s decision not to expand Medicaid or provide alternative coverage for poor people means the Medicare cuts will not be offset. That decision is estimated to cost N.C. hospitals $440 million per year. Hospitals’ operating margins are projected to decline by 2.4 percent in states that refuse Medicaid expansion. The average North Carolina hospital operating margin in 2011 was 2.2 percent. Medicaid covers 1 in 6 hospital patients. Although hospitals lose money caring for those patients, Medicaid payments are higher than payments for the 1 in 9 patients who are uninsured. You joined hospitals in lamenting the state’s decision.

Allowing private physicians to cherry-pick the few profitable services from hospitals in the future will not affect past hospital margins. It would undermine hospitals’ future ability to meet our mission and mandate of serving everyone, every hour of every day, without regard to their ability to pay.

We urge you to focus forward. See the seismic shift that the ACA and not expanding Medicaid are creating. Hospitals are preparing for an earthquake and fighting desperately to build foundations that will stand for our communities and patients. The “profit-ectomy” has already occurred.

Bill Pully

President, N.C. Hospital Association, Raleigh

The length limit was waived to permit a fuller response to the editorial.

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