When Congress and the White House passed the law setting in motion the end-of-year spending cuts, they put Medicare benefits off-limits. Not so for healthcare providers, and in the
Quad-Cities, officials say, that means millions in cuts for the two area hospital systems.
For Genesis Health System, the 2 percent cut to Medicare payments means a $3 million hit. For Trinity Regional Health System, it’s $5 million.
With Medicare patients making up roughly half their volume — and the Affordable Care Act necessitating further cuts in the years to come — any reduction in those payments is noticed.
“Obviously, another 2 percent is difficult,” said Rick Seidler, Trinity’s chief executive officer.
He said the hospital system has planned on the cuts in its fiscal plan for next year. He said it has no plans for any across-the-board cuts as a result. Instead, he said, it will exercise greater cost containment.
“It’s day-to-day management,” he added.
Doug Cropper, the CEO of Genesis, said the organization has done some “scenario planning,” but isn’t specific about the steps it would take. Like Seidler, though, he did not indicate significant changes.
“We were aware of this when it was put in place and we’ve been preparing for reductions,” he said. “We’re not going to make any dramatic moves, but it just creates tremendous stress on a system that’s already under stress.”
The cuts would also affect physicians. And in addition to the 2 percent Medicare cut, they face a 27 percent cut that would result if Congress does not pass what’s commonly called the “doc fix,” a measure averting drastic payment cuts that were set in motion by a late-1990s budget bill but have regularly been averted. Cropper says such cuts would be “devastating,” but added that he does not expect them to go into effect. Many Quad-City area physicians work for the two hospital systems or have some affiliation with them.
The hospital industry, like much of the medical profession, is changing rapidly, some of it sped along by the two-year-old Affordable Care Act. The Medicare provider cuts in that legislation come with a trade-off: Hospitals are expected to get more patients as a result of expanding health insurance coverage for more than
30 million people nationwide. Still, the CEOs at both of the area hospital systems say their operations already maintain about 2 percent operating margins. With less money coming in — and the potential of a 2 percent Medicare trim at the end of the year — less money is left for investments that they believe improve healthcare in the community.