By Chris Serio Martin, Truth Staff
cmartin@etruth.com
ELKHART -- Job losses are the immediate casualties of this recession, but without reform, our local hospitals -- where the seriously ill must go for help -- may be heading for stormy weather as well.
Hospitals used to be considered recession-proof. People will still have heart attacks and cancer and need the life-saving services of the emergency room. But the health of our local hospitals is tightly intertwined with the economic health of local businesses.
As businesses struggle and job losses mount, Elkhart County's two nonprofit community hospitals, Elkhart General Hospital and Goshen General Hospital, are navigating ways to remain solvent.
As the recession generates increasing jobless numbers and topples local employers, people will continue to lose their employee benefit of health insurance and many will enroll in subsidized, state-run Medicaid.
"You're going to find in the near term more and more people qualifying for Medicaid and the state budget won't support Medicaid expenditures at the level that will be necessary for those additional enrollments," said Gregory W. Lintjer, president of Elkhart General Hospital.
Many of those residents who are unemployed or low-income who do not qualify for Medicaid will remain uninsured.
Most businesses expect they will be paid for the goods or services they provide. Not-for-profit community hospitals, such as the ones in Elkhart County, do not turn patients in need of emergency or pressing medical care away, even if they cannot pay.
Private insurance -- often provided to employees by employers -- historically has offset the reduced reimbursements from Medicaid and Medicare. That's how the medical costs were covered, low-income patients could receive care and the hospital remained economically viable. The recession means fewer tax dollars going into the state coffers. As in other government programs, the two state subsidized insurance plans, Medicaid and Medicare, may face funding issues and have to reduce the scope of medical care they cover.
Balancing the cost of health care
In this recession, "Medicaid will go up as the unemployed need health services," said James O. Dague, president and CEO of Goshen Health System. To cover the costs of medical care, "We shift those (costs of care) to the better-paying population, of which there are less because of the unemployment increase."
Medicaid insists medical providers give a discount on health-care services, as much as 80 percent for hospitals. If Medicaid receives a 75 percent discount at a local hospital, Medicaid is only paying 25 percent of the bill, or 25 cents on the dollar. Private-paying patients make up the difference. Medicare pays a slightly higher rate.
At local community hospitals, Medicaid and Medicare make up about 50 percent of the hospitals' revenues. That balance will shift if fewer private payers are available to offset the costs of caring for Medicaid and Medicare patients, straining the hospital's income statements.
Both Elkhart General and Goshen General are already seeing increases in cases of bad debt and charity care.
* Bad debt: those medical bills patients are having difficulty paying or are unwilling to pay. The hospital actively pursues those debts but may never collect the fees.
* Charity care: medical bills hospitals will take as a write-off. They know those patients will never be able to pay them.
EGH spent $13 million on charity care in 2007 and $15 million in 2008.
"We're expecting bad debt and charity care at a minimum to increase 10 to 20 percent," Lintjer said.
The smaller Goshen General Hospital spent $1.75 million on charity care in 2007 and more than $5 million in 2008.
Healthcare reform for sustainability
As states try to balance decreasing tax revenue with demands for all the services they provide, such as education, highways, and Medicaid and Medicare, for example, both Lintjer and Dague said states will have to cut what care these insurance plans cover.
"Most of us can't make money off of Medicare, much less Medicaid. It just doesn't happen," Lintjer said. "In places, the solvency of your organization has some degree of risk." The system, as it stands, is not sustainable.
Dague expressed the same sustainability concerns. Both Lintjer and Dague agree that planning for the far future is very difficult, with immediate cost pressures threatening the economic viability of Elkhart County's medical assets.
"We know what the variables are in the near future," Dague said. "Trying to relate to those variables to maintain solvency while we meet our mission of (meeting) community needs is getting progressively more difficult."
They said sustainability may depend on health-care reform, which the Obama administration has promised.
What's at stake? Money. And medical care. The United States spends between 17 percent and 20 percent of its gross domestic product on health care, 4.3 times the amount it spends on national defense, according to the National Coalition on Health Care.
Even if a consensus on reform is reached, Dague said implementing change will take time, perhaps two or three years.
What may have to change is the way Americans consume health care.
"We as Americans have this issue with wanting always to have access to the best and the latest care without consideration to cost," Lintjer said.
A large percentage of a person's lifetime medical expenses usually occur during end-of-life treatment. Doctors are trained to save lives and work hard to solve the illness puzzle, often prescribing tests and treatments to try to prolong life.
In some cases, "The best care is not every last test, or every last referral to a specialist," Lintjer said. "Actually, in some cases, the best care could be the conversation about how you and your family should prepare for death. We as a society have a difficult time coming to grips with that."