HomeTown Health - Ga Health Care Fall Industry Update 2010

HomeTown Health - Ga Health Care Fall Industry Update 2010

Current Georgia Rural Hospital Scenario


Basis for HomeTown Health Observations1) Approximately 50 hospital visits since May 1,

20102) Four 2 day Budget Writer Visits to rural hospitals3) Recent 2-3 Dinner with Senator Goggans, Rep

Channell, Lunch w Sen. Tommie Williams4) Two national conferences5) Study Forecast with Dr Carolyn Bordeaux SBO


19 Hospitals currently in consolidation or major financial distress, i.e. major cuts


Self Pay Higher Insurance Premiums driving industry from providing health care

Obamacare has caused insurance premium increase for small business to be at least 15% up to 35%

Higher deductibles Higher- Co-pays

Essentially have created a class of insured self pays

Consequence Rural Ga Hospital Net Revenues down 5%-15% since Jan1 2010


Payor Mix has amplified Self Pay to an overwhelming component of net revenue

Next slide illustrates


Major Issue

General PPS Hospital Actual Data

Payor% cost reimbursement

% Net Revenue by Payor

Weighted Reimbursement by Payor

Medicare 95.00% 42% 39.90% Medicaid 85.60% 20% 17.12% No Pay 2.00% 13% 0.26%

Commercial 150.00% 25% 37.50%

Weighted Loss 100% 94.78% Net Revenue Cost recovery Loss requiring subsidy $18,000,000 94.78% $ 939,600

Wow! To 18%


Rural PPS Hospitals in Georgia – Status?


Positives for Stand Alone Rural PPS Hospitals Virtually No operational positives except best

administrators in the industry Medicaid Rate Increase designed to offset Provider

Tax – 1st Medicaid Rate Increase since 1998


Negatives for Rural PPS Hospitals Very poor Payor Mix 85.6% of cost paid for Medicaid In counties of highest unemployment Cannot support specialties like surgery due to demographics Encumbered by cost to charge ratio Major subsidy dependent Demographics do not support surgeons or specialist except on part

time basis thus insufficient Commercial


Current Threats Provider Tax-Medicaid Rate Increase disparity from 2008 baseline Provider tax could be reopened leading to an expanded provider tax and loss of CAH

exemption, especially if model revisions are used to reopen the subject Days Cash below 10 days Can’t recruit physicians Macs /Racs Bank covenant violation State Computer Conversion – ACS to HP Medicaid expansion to + 33 million Simply run out of cash Loss of UPL and dilution of Private DSH Gubernatorial Transition – no state budget experience


The Issues - What Are They?


Issues Budget $2 billion more to cut in 2012 Half billion more to cut in 2011 Revenues down this year as much as 15%-20% Unemployment still over 10% in most rural areas Self Pay soaring to 15%-20%

GRHA

2012 State Budget Implications

2008 $21.0 Billion

2011 $17.5 Billion

2012 Cut another $2 billion

2012 Possibly to $15 billion


GRHA

2012 State Budget Implications

1) Rural Health Care Access Loss – No OB, 32 of 34 CAH’s2) No OB in 5 PPS plus 4more to drop3) Virtually no surgery in rural hospitals4) Up to 17 rural hospitals can close or reconfigure in 2012 – 4

PPS and 13 CAH5) Major Program elimination

1) Current Instructions from OPB – 4%,6%,8% cuts 20112) Headline – Cooperative Extension Scaling Back

- 24% budget in 2 years- Eliminated 80 extension agents


GRHA

2012 State Budget ImplicationsMake the case 1) Budget = 85% Education, Corrections, Medicaid2) Medicaid Stimulus stipulation says cannot cut eligibility thus

only rates which are already at 85.6% of cost.3) Can we take $2 billion out of Corrections and Education? No so

everything else goes!!!??


GRHA

2012 State Budget Implications1) There is no health care unity! Silos2) There will be agency and program pickoff’s/closures3) There is no statewide health care mission nor strategy4) New Governor will have overwhelming budget issues to override individual health care programs needs5) There is a 2012 $140 million FMAP shortfall due to Congressional underfunding


Ga Health Ga Health Care Industry Update 2010Care Industry Update 2010

FQHC’s

AHEC’S CSB’s Rural Hospitals

Health Care Silos

Nursing Homes

Urban Hospitals

Public Health

GRHA

Four largest Rural Health Care Issues

1) State Budget Shortfall through 2016 per SBO2) Profit differential between urban and rural hospitals

a) Rural health care gets painted with urban high profit brush3) Loss of rural presence in legislature

a) 2 or more senators lost due to censusb) 4-6 state representatives lost due to censusc) 20 or more legislators retiring or getting beat in Nov 2010

4) Georgia Physician Shortage1) 300 shortage to date2) 300 shortage more as a result of Health Care Reform


GRHA

The Future of Georgia’s Rural

Health Care


GRHA

The Future of Rural Health Care1) Rural Hospital Closures2) Regionalization3) Consolidation of programs4) Accountable Care Organizations – ACO’s

1) 5000 Medicaid covered lives5) Telemedicine6) Health Care Reform

1) $500 billion cut in Medicare2) $500 billion penalties and fraud recovery


The Future of Rural Health Care 1 of 61) Rural Hospital Closures

1) 5-10 rural hospitals can close in next two years2) Will destroy 5-10 economic engines3) Will destroy immediate access to health care to 100,000 Georgia

citizens 4) FQHC’s compete with rural hospitals for volume until hospital

closes then FQHC has to re-engineer itself with no local acute care referral station. Federal funded FQHC trumps locally/state funded delivery systems until they fall then FQHC’s have major problems. $10 million annually to state from Feds.

5) Example McRae Hospital closed last year


GRHA

The Future of Rural Health Care 2 of 61) Regionalization

1) It takes 40,000 population to support a hospital and 33% commercial

2) It takes general surgery and Orthopedics3) Local hospitals have to either consolidate or collaborate

resources4) Example – Ty Cobb closing two hospitals to make one


GRHA

The Future of Rural Health Care 3 of 61) Consolidation of programs

1) Public Health will consolidate with duplicate agencies2) Territorial silos have to be torn down to eliminate duplicative

services3) Example-

1) If every district does something different and state says standardize and eliminate non-core work

2) Orthopedics in Southeast Georgia – Tattnall, Jenkins, Screven, Jesup


GRHA

The Future of Rural Health Care 4 of 61) Accountable Care Organizations – ACO’s

1) 5000 Medicaid covered lives2) They are ill-defined but mandated in the health care reform

package3) Will result in capitation type organizations which will require

new collaborations


GRHA

The Future of Rural Health Care 5 of 61) Telemedicine

1) This is the new glue2) Two new grants

1) $2.5 million for program expansion2) $1 million over 3 years for national telemedicine extension

center3) Currently 170 sites with 40,000 consults

1) Will add 67 sites immediately due to new grant2) Hospitals, nursing homes, CSB’s, Corrections, Public Health,

school nurses, trauma, stroke,3) Will evolve to in-home on-line delivery of health care via

telemedicine – on line consults


GRHA

The Future of Rural Health Care 6 of 61) Health Care Reform

1) $500 billion cut in Medicare2) $500 billion penalties and fraud recovery

2) The State Medicaid program will take the brunt of cuts3) Cuts will translate to local unfunded mandates and loss of local

subsidy4) Major expansion of Medicaid while ICTF and UPL go away and

EMTALA, “prudent lay person” language, and “meaningful use” language will dictate


GRHA

And then there is the provider tax

will it be reopened?


GRHA

PoliticsHomeTown Health - Ga Health Care Fall

Industry Update 2010

HomeTown Health - Ga Health Care Fall Industry UHomeTown Health - HomeTown Health - Ga Health Care Fall Industry Update 2010

pdate 2010

This election may tip the balance of power away from old sourcesANALYSIS

Posted: August 2, 2010 - 12:19am | Updated: August 2, 2010 - 3:19amBy Walter C. Jones

ATLANTA - The makeup of the ballot shows how unusual this election is and provides evidence of how much Georgia is changing.

For one thing, it's already clear that South Georgia has lost much of its influence. The remaining candidates for U.S. Senate and governor are all from above the Gnat Line.

Veteran politicians from below the line saw their careers and hopes sputter as the primary returns were counted July 20, including Democrats Dubose Porter and David Poythress from Middle Georgia and Republicans Eric Johnson and Jeff Chapman from the Coast.

Another South Georgia giant fell in the Democratic primary for labor commissioner, former House Speaker Terry Coleman of Eastman to metro Atlantan Darryl Hicks, at least unless a

challenge changes the decision.The only candidates from below the Fall Line remaining on the statewide ballot are

Democrats Ken Hodges of Albany, the nominee for attorney general, and J.B. Powell of Blythe near Augusta, the nominee for agriculture commissioner.

Urban takeover of legislature

http://savannahnow.com/taxonomy/term/411

Carter: Budget math hard to figure

This new math is killing me!Seriously, how can 4.7 percent and 12.7 percent average out to be 1.3 percent?

When it comes to the state of Georgia's budget, that's what a lot of financial gurus are saying actually has happened during the first two months of this fiscal year.

In July of this year, revenues were up 4.7 percent from a year ago and in August they were up 12.7 percent from the same time last year. So that means that revenues are up 8.6 percent from where they were for the same two months last year, right?

Not necessarily. After all, if we look closely at the numbers much of the gain in revenue this year is due to fewer individual income tax refunds being issued by the state than last year. Many will remember that overdue income tax refunds were processed and paid out in

July and August of '09 and subtracted from that month's total tax collections.This year the state was timely in paying out the refunds in May and June. Couple this with the number and amount of tax refunds are

down this year and the number comparisons are understandably inaccurate.Nevertheless, there is reason for celebration and optimism, albeit guarded. August marked the fourth month in a row for growth in tax

collections after 17 straight months of declines.So, if we are trending in a positive manner and revenues are increasing, why has the governor ordered all state agencies except the

Department of Education to brace for a 4 percent cut in this year's budget and prepare for up to a 10 percent cut next year?Remember is that the current fiscal year 2011 budget has a revenue growth of 5.09 percent built into it and if the actual growth thus

far has only been 1.3 percent then we need to be prepared for a shortfall. The next few months should give us a clearer picture.Another reason is that Gov. Sonny Perdue is being conservative so that the next governor won't immediately have to order more cuts.

But the overriding factor in the 4 percent cut is to cover the shortfall of $140 million in the federal Medicaid assistance funding percentages (FMAP) that Congress failed to approve late last month.

Medicaid is the government's health insurance program for the poor that is primarily funded by federal matching funds drawn down with state dollars. It is the fastest growing entitlement program in government, as states have expanded eligibility and benefits.

Unlike other states, Georgia has been fiscally responsible in managing Medicaid. We spend $6,000 per person in poverty on Medicaid. New York spends $18,000 per person. Only 18 percent of Georgians are on Medicaid as opposed to 26 percent in New York.

Unfortunately, federal funding allows states that spend more on Medicaid to receive more matching funds, leaving states like Georgia holding the bag. For instance, while Georgia will receive about $240 million in FMAP from this latest approval, New York will receive

$2.4 billion.The 10 percent budget cut preparation that Perdue has ordered for FY '12 is in anticipation of a $1.8 to $2 billion shortfall that is

expected due to slow revenue growth as well as the loss of federal one-time stimulus funds.State Sen. Buddy Carter, R-Pooler, represents portions of C

Fmap loss

HomeTown Health - Ga Health Care HomeTown Health - Ga Health Care Fall Industry Update 2010

Georgia Legislative Changeover Coming

30+ new Representatives Nov 2010 16 new Senators Nov 2010 Pending Census Change

Up to 8 Rural Representatives lost Up to 3-4 rural Senators LostLoss of institutional knowledge

HomeTown Health - Ga Health Care Fall Industry Update 2010Health - Ga Health Care

Georgia Legislative Medicaid PoliticsRep Mickey ChannellSenator Greg Goggans


So what to do?

•Adhering strictly to proven operations benchmarks1)Performance Benchmarking

a.$103,000/FTEb.SWB <43%c.Supplies % Net Rev <10%d.Bad Debt % Net Revenue <8-10%e.CAH >30% Net Revenue Commercial-Self Pay <12% Net Revenuef.PPS >33% Net Revenue Commercial – Self Pay <12% Net Revenueg.Baby deliveries must exceed 350 annually otherwise drop due to Medicaid pull along loss

i.46,000 population required or if out migration can be controlled population required can drop to about 30,000 but not likely


•Adhering strictly to proven operations benchmarks4 C’s of survival for Georgia’s Rural Hospitals

1)Control – operations benchmarks2)Capture Out Migration – with docs3)Consolidate to achieve 40,000 demographic or mothership4)Close


HomeTown Health - Ga Health Care Fall Industry Update 2010

Documents

Transcript of HomeTown Health - Ga Health Care Fall Industry Update 2010