Editor’s note: This is part two in a three-part series on how cuts in state Medicaid reimbursements are affecting local health organizations. Look for installment three next Saturday.
By Cristina Janney
Newton Kansan
Cuts in Medicaid are not just about the poor.
They are affecting the health of larger institutions that serve people with varying incomes, such as hospitals, nursing homes, doctors’ offices and health clinics.
A pain in the
budget
for hospital
Newton Medical Center has estimated it will lose more than $500,000 this year as a result of a 10 percent cut in Medicaid payments that went into effect Jan. 1.
The hospital already is receiving only 25 cents on the dollar for services provided to Medicaid patients, said Steve Kelly, Newton Medical Center president and CEO.
Despite the cuts, NMC is required to provide care to all Medicaid patients.
The hospital is trying to avoid layoffs — something other hospitals in the area have not been able to stave off, Kelly said.
“We would do everything we could without sacrificing the care we provide and to prevent laying people off,” he said. “But at some point in time, we would have to look at labor costs. It is not something we have considered, and it is not something we want, but if they continue to cut, that is something that is possible.”
With the poor economy already putting a pinch on the hospital’s bottom line, NMC has tried to make cuts wherever possible —from looking at the type of facial tissue it uses to eliminating free hot chocolate in the cafeteria.
Now the hospital must be even more creative, turning to suppliers to cut their prices and searching for new services to generate additional revenue for the hospital.
One of those new revenue streams could be the addition to a bariatric clinic, Kelly said.
Hundreds
of thousands
in free care
Nursing homes — some of which have more than half of their residents on Medicaid — also are losing money on its Medicaid patients.
“It is a fallacy that we are making money on Medicaid. We have never made money from Medicaid,” said Cindy Vanover, CEO of Kidron Bethel Village in North Newton. “We spent more to take care of Medicaid patients even before the cuts in spending. We accept residents on Medicaid as a part of our mission to take care of the fragile and vulnerable elderly.”
However, that mission is becoming more difficult as the number of people qualifying for Medicaid increases, she said.
Kidron Bethel was losing $22.63 per Medicaid patient per day. With the 10 percent cut, it is now losing an additional $15.07 per patient per day for a total of about $37.70 per day per patient.
With 30 of Kidron’s 60 nursing patients on Medicaid, the Medicaid gap will cost Kidron about $1,113 per day or more than $400,000 this year.
The nursing homes are not just losing state dollars. They are losing matching funds from the federal government.
For every dollar the state cuts, the nursing centers lose another 70 cents in matching federal funds, said Tom Williams, Asbury Park CEO.
Asbury Park is expecting a big hit from the Medicaid cut as well. It has about 97 people in skilled nursing — 50 percent of whom are on Medicaid.
In 2009, Asbury Park gave away about $280,000 in free care. With the new cuts, it will give away about $635,000.
“We have worked hard on efficiency,” Williams said. “We have been hard nosed and tried to reduce overtime and be more efficient, but I am kind of concerned that the government did not realize that we would lose 70 cents for every $1 they cut. This is money that is going to other states around Kansas.”
Vanover also expressed frustration with the lost federal funds.
“The state saved $22 million, but they left $29.2 million on the table,” she said...” It is not logical. It is our federal money. It is our federal tax dollars that could be coming to us, and now it is going to other states.”
In addition to the hundreds of thousands in allowable Medicaid expenses that are not being funded, there are unallowable expenses that the nursing centers provide — everything from skin cream and over-the-counter medication to a chaplain, Vanover said.
Making ends meet
Asbury Park has frozen wages this year. Williams said the organization will have to re-evaluate its cash flow after the first two to three months of the year to determine if further cuts are needed.
“If we have to, we will reduce hours and positions,” he said. “If we have to cut, we are going to try to avoid the direct-care side of things. We have a lot of other operations positions we will look at closer.”
Kidron Bethel is in a similar situation, it also has frozen wages. It will not fund its retirement plan this year. It also has cut hours in attempts to preserve the jobs of staff who have direct contact with patients. About 60 percent of the organization’s expenses are in staff wages and benefits.
Vanover said nursing home care is a heavily regulated industry, and there is only so many cuts they can make before they violate those regulations.
Asbury is looking for more charitable contributions from the community in attempts to make up the funding loses.
“We have to increase our benevolence,” Williams said. “I think all retirement communities in Harvey County will be trying to increase their benevolent gifts to offset the difference. It puts pressure on all programs to find support.”
Williams said he believes Asbury will pull through these tough economic times.
“We are optimistic about what we can do to make ends meet. We hope that the economy will get better and people will use their intelligence and energy to see what can be done the right way,” he said.
System-wide
crisis
Vanover said Kidron is hanging tough and is not in danger of closing.
However, she said she has concerns for the nursing-care system as a whole, especially those health centers in rural Kansas that may have 70 or 80 percent of their clients on Medicaid. She said she fears some of these centers will close.
“No one wants their loved one to be 300 miles away because they can’t find a bed,” Vanover said. “It is something the state has to look at.”
The patients who are in nursing care, are the most fragile of the community’s population, Vanover said. Most must be lifted in and out of chairs, need help bathing and have extensive medical needs.
“If there is nowhere for these people to go, who will take them?” Vanover said. “It is a misconception that the people we have here can be cared for at home. Most families do not have the resources to do that at home — to have someone home all the time.”
