Hospitals Face Rising Costs, Declining Reimbursements

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Vital Signs: Vermont Charts A New Course For Health Care

(Host) Mount Ascutney Hospital in Windsor laid off 24 full- and part-time employees last week.

Officials at the small facility say the cuts are due to rising costs and declining reimbursements – a problem shared by hospitals throughout the state.

And as VPR’s Susan Keese reports, the squeeze is complicated by politics and the many unknowns associated with the health care overhaul debate.

(Keese) Kevin Donovan, the CEO at Mount Ascutney Hospital, says his hospital has been hurt by a drop decline in traditional insurance reimbursements.

(Donovan) "One of the things we’ve seen is as employers move to high deductible plans, where patients have first-dollar coverage and more responsibility for their own bills, they have been either unable or unwilling to pay some of those bills. So we have seen an increase in our bad debts and charity care."

(Keese) Then there’s the ongoing problem of declining Medicaid reimbursements. Donovan says state payments for Medicaid are about half of what services at the hospital really cost.

Donovan says Mount Ascutney’s patient numbers are as robust as they’ve ever been, but the hospital has been losing money consistently.

He says the prospect of new Medicaid cuts, working their way through the Legislature – coupled with a proposed hike in a state tax that hospitals pay – were the final factor that forced last week’s layoffs.

The situation is similar at Vermont’s second-largest hospital. Thomas Huebner is the president at Rutland Regional Medical Center.

He says times are tough financially at all of Vermont’s hospitals, though Rutland hasn’t seen any layoffs to date.

(Huebner) "I think what’s happened at Mount Ascutney is symptomatic and I know Porter hospital in Middlebury also had some layoffs a few weeks back."

(Keese) Huebner says the tough economy has also meant many more people are on Medicaid, which translates into fewer full-paying patients.

And the debates on overhauling health care in Montpelier and Washington turn financial planning into a guessing game.

(Huebner) "We have to present our budgets to the state by the end of June and we’re all beginning that process and trying to understand where the world is headed, at least to the best of our ability."

(Keese) Bea Grause heads the Vermont Association of Hospitals and Health Systems. She says the climate is extremely challenging, and predicts more layoffs ahead as the state grapples with its budget deficit and health care is overhauled.

(Grause) "The rules that we used to play with are changing. So I think what health care looks like in Vermont the next two years, three years, five years, are really going to change dramatically and we really don’t know what it’s going to look like."

(Keese) But Grause says Vermonters will continue to need community hospital services for everything from childbirth to hospice care.

She says there will be changes in the way that care is managed and delivered. But she hopes Vermont’s hospitals can hold on and keep doing what they’re best at, until a better system is in place.

For VPR News, I’m Susan Keese in Manchester

(Host outro) VPR News is taking an in-depth look at the health care debate this week. Click here for Vermont Edition’s series, Vital Signs.

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