GREENSBURG — Decatur County Memorial Hospital (DCMH) has announced it will lay off 30 members of its workforce; affected employees will be notified by the end of October.
In a recent open letter to DCMH employees obtained by the Daily News, President and CEO Linda Simmons announces the layoffs, writing, “Our team members – our colleagues and friends – are the most important asset to our organization’s mission, and I assure you that the decision to reduce our workforce was reached only after much discussion and thoughtful analysis. While regrettable, these reductions are necessary if we are to offer affordable and preeminent care to the patients and families we have the honor to serve.”
In a phone interview with the Daily News Tuesday afternoon, Simmons expressed hope that the final number of layoffs would come to under 30, a possibility she also discusses in the letter. To that end, the facility has created a voluntary retirement program for hospital directors who are at least 60 years old. The hospital will also leave certain open positions unfilled as an additional cost-cutting measure.
“We wanted our staff to know first,” Simmons said in explaining the letter. “We have also informed the County Commissioners.”
A number of factors have forced the need for job cuts, Simmons added. Pressure to reduce costs in the healthcare industry are always high, she noted, but the current pressures leading to the upcoming layoffs began with government sequestration in January, which took effect when the US Congress couldn’t agree on a Federal budget.
Sequestration cuts led to a two-percent decrease in Federal reimbursement dollars through the Medicare program. That rate, Simmons said, currently stands at between 90 and 94 cents on the dollar, depending on the procedure and other factors. “We’re thankful if we can get that [amount],” Simmons said.
In essence, then, DCMH (and every other hospital across the country) loses money on every Medicare patient served. The reimbursement rate for Medicaid patients – the state-funded equivalent to Medicare – is far, far worse – 12 to 17 cents on the dollar, according to Simmons.
How to make up those shortfalls?
“You hope to make it up through cost shifting,” Simmons said, defining cost shifting as using profits earned through other hospital services and subsequent reimbursement sources to help defray costs for and maybe even generate a modest profit on Medicare patients.
At present, DCMH’s biggest cost-shifting generators are insurance companies covering insured patients as part of normal coverage. Such companies are known in the healthcare industry as commercial payers.
The problem, Simmons explained, is that commercial payers are constantly trying to renegotiate the amounts they reimburse hospitals for given services. According to Simmons, those companies point to Medicare – even to Medicaid – reimbursement rates and try to use those for leverage when negotiating rates.
“They know the rates we’re being reimbursed by Medicare and Medicaid,” Simmons said. “That creates constant pressure, and I’ve got to give somewhere. We have to improve efficiencies, drive down waste and make tough decisions regarding what we can or can’t do without. I’ve got to make sure my costs come in at about Medicare reimbursement rates. The goal is to be able to live on Medicare subsidies.”
The recent opening of health insurance exchanges through the Affordable Care Act (a.k.a. ObamaCare) has made the situation even tougher, Simmons said.
The reimbursement amounts paid by companies participating in the government-run exchanges has been set at Medicare rates. Moreover, the exchanges are being handled by the Federal government as expansions of Medicaid, meaning individuals previously uncoverable through Medicare will now be welcomed into Medicaid expansion. Granted, the Federal government will be subsidizing the Medicaid expansions and the reimbursement rates are set at Medicare rates, but this will still mean an influx of patients on whom hospitals lose money. For DCMH, that influx is apt to be particularly high.
“Fifty-two percent of students in Decatur County qualify for reduced lunches,” Simmons said, suggesting that those numbers portend to a high number of Decatur Countians who will sign up for insurance through the exchanges. “We’re very thankful that the reimbursement rate wasn’t set at Medicaid rates. That would have been devastating.”
Contact: Rob Cox 812-663-3111 x7011