Johnston Health, which operates hospitals in Smithfield and Clayton, will make do in the year ahead with about $6 million less in revenue than it had hoped for.
The state’s decision not to expand Medicaid through the Affordable Care Act will cost the hospital about $3 million, officials say. Cuts to Medicare and Medicaid and the federal budget sequester, proposed by the president and approved by Congress, will cost the hospital another $3.1 million.
Still, Johnston Health is in a better financial position than many North Carolina hospitals thanks to its impending alliance with UNC Healthcare, hospital leaders say. The two health care providers expect to begin doing business together in late September.
Chuck Elliott, Johnston Health’s chief executive, said patients won’t feel the effects of the shortfall in revenue. “We’re not planning any service reductions,” he said.
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But patients with health insurance could pay more for care because of the revenue loss, Elliott said.
Across North Carolina, hospitals are shuttering services to save money. WakeMed, for example, recently announced that it would close two of its nursing homes.
Johnston Health plans nothing so drastic, but Elliott said the future is uncertain. “It’s continuing to get more and more challenging,” he said of the health care environment. “All hospitals will be forced to make hard decisions over the next few years related to their services.”
Johnston Health, which became unprofitable during the recession, is wrapping up a strong fiscal year, but it will be hard-pressed to make money in the year ahead, Elliott said.
The CEO said the alliance with UNC will help Johnston Health survive the lower Medicare and Medicaid reimbursements that are part of the Affordable Care Act. Elliott also expects UNC to bring specialized services to the county, such as pediatric cardiology, with UNC doctors coming to Johnston to provide care.
“We may be getting a neurologist,” Elliott added.
UNC will also invest capital dollars in Johnston Health facilities, though the sides are still negotiating the amount.
The hospital expects a net operating revenue of $160 million for the fiscal year that starts Oct. 1.
Coming to Clayton
Also on the Johnston Health horizon is the construction of an inpatient hospital at Johnston Medical Center in Clayton. Construction is scheduled to begin in September on the three-story building, which will have 50 beds.
The new building will also have a maternity ward on the first floor. The idea is to attract patients who now go out of the county.
“We hope to keep those patients in Johnston County,” Elliott said.
The trend in health care is fewer inpatient stays because they cost more. So far this year, for example, Johnston Health has had 7,400 admissions. In the same period last fiscal year, there were 8,000 admissions.
But the drop partly reflects a change in how hospitals label patients, Elliott said. Some are now “observation patients.” Such patients still use beds and can stay overnight, but the Medicare-reimbursement rate is lower.
In any event, Elliott said he expects the Clayton beds won’t go unused.