The hospitals are to blame

Last week The Courier-Journal published an article that misleads and misrepresents the effects of Obamacare on hospitals in Kentucky. In truth, to call this an “article” does a true disservice to real news articles. Its premise, based solely on a report done by a hospital trade association (essentially a pro-hospital lobbying organization) — The Kentucky Hospital Association (KHA) — can only be described as a concerted effort to discredit and undermine the Affordable Care Act in Kentucky, and in particular the Medicaid expansion.

The article headline, “KY hospitals: Obamacare forcing cuts, layoffs,” places the greatest emphasis on hospital employment. This is a great headline to get readers, but it does nothing along the way of educating or enlightening the public to the realities of the issue.

According to the KHA white paper, hospitals saw a total of 7,706 in “workforce reductions”  from 2013 – 2014. The largest of those reductions, 4,922 jobs, are attributed to attrition — positions that were vacated and not filled by the company, usually through resignation or retirement. Counter that number with 2,784 layoffs and eliminated positions (1,268 and 1,516 respectively) and your hope is that the primary reason, albeit still ambiguous, is that hospitals are finding more ways of being efficient. The reality is that Obamacare has forced hospitals to become more efficient in a number of ways, in particular standardizing and digitizing medical records.

The other thing that is happening is that the larger hospitals are now losing admissions for better care and specialty care. Specifically, with advances in surgical procedures requiring less recovery time and an increasing number of outpatient procedures, there is less demand for overnight stays and recovery care.

Ultimately however, the number of “job reductions” — not lost jobs — is more than covered by the number of new jobs created as a result of the Medicaid expansion alone. A report was done earlier this year, in part by the U.S. Bureau of Labor Statistics, that found more than 12,000 new jobs, including 5,400 in the health care industry, have been created as a result of the Medicaid expansion in the first year of the program. The report also cited the Urban Studies Institute at the University of Louisville, which estimates that Medicaid expansion will create more than 40,000 jobs by 2022.

The next egregious manipulation of facts is that the KHA claims the largest significant “cuts” to come in Medicare and Medicaid coverage. The most important thing to note is that the difference in compensation for cost of care is strictly according to what hospitals claim the cost of care to be; this is in no way a reflection of what taxpayers will have to account for. Kentucky’s expanded Medicaid program is fully covered, 100 percent, by the federal government, ultimately being phased down to 90 percent in 2024.

However, the specific issue with the hospital’s claim — that only 82 percent of the cost of care for Medicaid patients is covered by the government program — is exclusively a reflection of their own formula to calculate cost of care. So if they deem that it costs them $10 to deliver a Tylenol, the government is going to reimburse them $8.20 for that Tylenol. What will drive you even crazier is that those actual costs are kept private by hospitals, rendering it impossible for any oversight over the real costs.

To be fair, when you have a nurse delivering Tylenol to a patient staying in a high-priced hospital bed, the price will be greater than what we pay at Walgreens. Ultimately though, we have no way of knowing the real number, and you can be certain they are not taking a loss on their Tylenol. So when the report cites $4.6 billion in cuts associated with Medicaid and uncompensated care, that number could quite literally be made up.

The other complaints that are cited in the white paper are direct admissions that hospitals don’t feel they should be responsible for quality of care, nor take responsibility for hospital-acquired illnesses. One of the great cost-saving efforts of Obamacare is in the areas of preventative care, as well as unnecessary treatments, admissions and readmissions.

In a startling display of candor, and disregard for onsite health conditions, the KHA is advocating that hospitals not be any more responsible for hospital-acquired diseases. It says, “Beginning this year, one-fourth of all hospitals in the United States will have all Medicare payments cut if their rates of hospital-acquired conditions increase — even if the rate of occurrence is small.”

As for patient readmission, the report says, “Hospitals that readmit patients within 30 days of discharge at higher-than-expected rates for any reason (even if the readmission was not preventable or did not relate to the patient’s original hospital stay) have had all of their Medicare payments reduced.” The maximum penalty they could incur is three percent of their Medicare reimbursement.

First, hospitals should not think of these as penalties; these are incentives for taking responsibility and doing their job well. Second, these are not draconian measures. The first person who is readmitted within 30 days does not immediately lead to a penalty. The incentive is to keep readmissions under a “higher-than-expected rate,” which ultimately will lower costs, and create a healthier, happier and more productive Kentucky.

Finally, and this is the most blatant evidence of manipulation by the KHA, as a major contributor to their top-line number of nearly $7 billion (from 2010 to 2024) in federal cuts, they cite sequestration as a major factor. Sequestration is the across-the-board cuts in all federal funding passed in 2011 by both parties in Congress and President Obama. In no way can any of the cuts connected to sequestration honestly be associated with Obamacare, and it takes a shameless organization to claim as much.

The hospitals, and in particular the larger hospitals, are the major culprit in the battle to reel in the cost of health care in this country, particularly Medicaid. To make matters worse, their influence in Washington, Frankfort and every other state legislature in the country, make for manipulated, distorted views of reality, create fear, misunderstanding and distrust of our institutions, and lead to bad policies.

Ultimately, they must not be allowed to manipulate our legislators, our media and continue to able to operate in secret, without any oversight from the hand that is feeding it. As taxpayers and supporters of the industry, we should expect and deserve better.