Payment cuts lead Missouri hospitals to reduce staff, services, and capital investments

JEFFERSON CITY, Mo. — A new survey of Missouri’s hospitals finds that nearly 1,000 fulltime equivalent positions have been reduced in the last six months, and a hiring freeze has been implemented for another 2,145 positions. The reductions are in response to federal funding cuts, high uncompensated care costs and changing utilization patterns.

Between 2013 and 2019, payments that Missouri hospitals receive from the federal government will be reduced by nearly $4 billion. Without Medicaid reform, the state’s hospitals will be left without the new revenue from expanding health insurance coverage to the uninsured and will continue to experience increased uncompensated care costs. Hospitals’ provision of charity care in 2012 was up 32 percent since 2010. The survey shows that hospitals are beginning to address the fiscal imbalance by reducing staff, delaying and canceling planned capital investments, and reducing service lines. Moreover, the cut likely will become more pronounced later in the decade.

“So much of this debate has been about the philosophical dilemma over reforming Medicaid,” said Dan Mehan, Missouri Chamber president and CEO. “We are here today to demonstrate the very real dilemmas of inaction. We are talking about real workers who are losing their jobs. We are talking about real community hospitals that will be forced to reduce services or shut their doors. We are talking about real people suffering from heart attacks, strokes or other emergency medical conditions that will kill them if they have to drive an hour and a half to the nearest hospital.”

Just fewer than half of the 84 hospitals responding to the survey had laid off staff members, for a total of 998 health care employees statewide. These include the layoffs at ConnectCare in St. Louis. More than half of the participating hospitals indicated they had implemented a hiring freeze. Among these 49 hospitals, 2,145 positions are either currently or prospectively affected by a hiring freeze.

The survey also included questions about plans for hospital capital investments. Although less than half of hospitals responded that they have canceled or delayed needed renovations or building repairs, the scope of the total lost investment is sizable. Of the 37 hospitals responding that they are delaying or canceling capital investments, 26 are from rural areas where the economic value of this investment is a significant local economic driver. Among all hospitals, the total in lost investment is conservatively estimated at more than $100 million

“Eliminating as much as $100 million from building improvement projects also will negatively impact our economy,” Mehan said. “It will stifle opportunities to provide health care most efficiently and effectively in Missouri. Instead, we will send our tax dollars to other states to improve their health care systems.”

Maintaining local medical services — especially in small communities where hospitals are key to recruit and retain physicians — is essential to improving community health. However, some hospital service lines are profitable while others are not. Generally, hospitals balance the costs to maintain a robust service line offering. However, with the scope of the cuts that hospitals are facing and the uncertainty of a reduction in the uninsured, hospitals may have no choice but to limit the scope of the services they offer.

Surveyed hospitals were asked what service lines are being considered for reduction. The following examples were offered as service reduction options by the 40 hospitals responding that service line cut were under consideration.

- rural health clinics and satellite clinics
- home health and hospice
- oncology service
- hospital provided ambulance services
- inpatient and outpatient mental health/counseling services
- wound care
- diabetes mobile outreach program

“Medicaid reform matters,” said Herb B. Kuhn, MHA president and CEO. “Without it, financial constraints will continue to limit hospitals’ ability to deliver services to Missouri communities and support local economies. What this data demonstrates is that the damage is already occurring.” Earlier research indicates that without significant additional coverage through the health insurance marketplace and Medicaid, Missouri hospitals could lose 5,000 employees by the end of the decade.

Moreover, budget projections through the end of 2020 indicate that reform could allow enough state savings through program management to offset any additional state cost as the state match increases.

“Medicaid reform will not be an expense for the state — it is an investment where returns are measured in sustaining and creating new jobs, increased productivity for our state’s workers and improved health in our communities,” Kuhn said. “We have a chance to return Missouri’s federal taxes to the state and use those resources to shape our health care infrastructure through new and innovative delivery models that are designed to deliver on health care’s the Triple Aim — better care, better health and lower cost.

“Medicaid reform is a once‐in‐a‐generation chance to reshape the state’s health care future,” Kuhn added. “This debate shouldn’t be about ideology — it’s about common sense leadership for the state of Missouri.”

The Missouri Chamber of Commerce and Industry (www.mochamber.com) was founded in 1923 and is the largest business organization in Missouri, representing almost 3,000 employers providing more than 425,000 jobs for Missourians.

The Missouri Hospital Association is a not‐for‐profit association in Jefferson City that represents 154 Missouri hospitals. In addition to representation and advocacy on behalf of its members, the association offers continuing education programs on current health topics and seeks to educate the public about health care issues.