Denver Hospitals Avoiding Big Financial Hits -- For Now
May 06, 2009
Friday, April 24, 2009
Denver hospitals avoiding big financial hits — for nowDenver Business Journal - by Bob Mook
Kathleen Lavine | Business Journal
Jeffrey Selberg of Exempla Healthcare expects a drop in patients.
View Larger Colorado hospitals are feeling the pain from the economic downturn — but less than hospitals in other states and other sectors of the economy are experiencing.
Local hospitals are taking several measures to cut costs. But so far, that hasn’t resulted in mass layoffs, as is happening at medical centers elsewhere.
However, that could change if proposed cuts in Medicaid reimbursements go through, observers say.
To avoid cuts in higher education and other programs, Colorado lawmakers want to lower reimbursements from government health plans by 4.3 percent. That would trim $27 million from the state budget, but would end up costing doctors as much as $57 million because of money lost from a federal matching program, according to a joint statement from the Colorado Hospital Association, Col-orado Medical Society, Colorado Community Health Network and the Colorado Chapter of the American Academy of Pediatrics.
Jeffrey Selberg, president of Exempla Healthcare, said the hospital system has lowered its 2009 capital construction budget from $200 million to $160 million. That means projects such as the renovation of Lutheran Medical Center in Wheat Ridge will be completed on a slower timetable and possibly scaled back.
Selberg said though the number of patients hasn’t dropped, Exempla has started to lower operating costs in anticipation that business will slow down.
“We expect a downturn in the number of patients we care for and how we get paid,” Selberg said, adding that as more people lose their benefits, the number of patients who receive assistance from government programs such as Medicaid, or who pay out of pocket, is likely to increase.
That means hospitals likely would get lower reimbursements because government insurers pay less than private ones.
But Selberg added that hasn’t happened yet.
“We are not seeing a change in payer mix.” he said. “But we expect it will hit us later this year.”
Still, sensing that health care tends to lag behind other industries, Selberg said Exempla has delayed merit increases for workers and added a contingency plan to cut jobs if patient enrollment decreases.
Exempla has eliminated 10 positions this year. The hospital system employs 7,068 people.
“Our staff has been outstanding in terms of their willingness to make sacrifices to protect jobs,” Selberg said. “They’ve taken paid time off voluntarily, given up staff picnics and other discretionary expenses.”
Linda Kanamine — a spokeswoman for HealthONE-HCA, which owns and operates seven hospitals in the Denver area, including Presbyterian-St. Luke’s and Rose Medical Center — said the hospital is watching expenses “very carefully” and cutting back overhead so that clinical and bedside operations aren’t harmed.
Many of HealthONE’s efforts have revolved around helping employees meet financial challenges, including offering financial-planning classes and a career-development program.
Centura Health, Colorado’s largest health care system with 12 hospitals, including Denver’s Saint Anthony Central, has experienced only a 1 percent decrease in admissions in the last year, according to Centura spokeswoman Kathy Borgais. She noted that uncompensated care for those who can’t pay for medical services increased by more than $33 million from 2007 to 2008.
Allan Baumgarten, a Minneapolis-based health care analyst, said hospitals nationwide have been hurt by a decline in patients driven by a deteriorating economy.
“Either people don’t have [insurance] coverage or they have higher deductibles,” he said. “Hospitals have to do collections instead of insurers, and that’s becoming a growing problem for hospitals and doctors alike.”
Selberg said federal stimulus money, as well as a plan approved by Colorado Gov. Bill Ritter to generate up to $300 million a year for hospitals through a new surcharge, will “certainly help.”
But with Colorado legislators weighing cuts in reimbursements, Selberg said he doesn’t know if local hospitals will finish ahead in the end.
Selberg said the cuts are likely to hurt safety-net hospitals such as Denver Health, which rely more than Exempla on funding from government programs.