TennCare cuts could flatline hospital profits
Gov. Phil Bredesen’s proposed TennCare cuts are not only going to impact Tennessee citizens who have depended on TennCare for their health insurance, they are also going to make a major dent in the bottom line of Tennessee hospitals.
Tony Garr, executive director of Tennessee Health Care Campaign, said the effect will be significant as hospitals try to absorb the cost of care for those who have no insurance, either with discounts or straight out charity care. Garr noted he had seen figures from the Tennessee Hospital Association that indicated much of the cost for Bredesen’s plan would fall on medical facilities.
“If this goes forward as the governor is proposing,” Garr said, “we can expect an additional loss to the bottom line of hospitals of $640 million.”
Garr finds those figures particularly interesting in light of Bredesen’s announcement.
“The governor is saying he’s short $650 million,” Garr said, “and I thought it was so ironic the hospitals were saying, just the hospitals, are anticipating a cost of $640 million.”
Locally, River Park Hospital reported it performed $146,185 worth of charity work in 2003. The highest reported total was Vanderbilt Medical Center with $22.6 million in 2003 charity work and discounted care for low-income patients.
Bredesen admitted TennCare cuts would put a financial strain on hospitals.
“Hospitals are going to have to absorb some of it,” said Bredesen. “Hospitals in Tennessee have been isolated from hospitals in other parts of the country for so many years because of TennCare. Their bad debt will go up, there’s no doubt about it.”
The governor also said he didn’t have an answer to this problem.
“My advice would be to talk to hospitals in other states and see what they’re doing,” said Bredesen. “How do you accommodate patients who don’t have insurance? Hospitals in other states have long had to deal with this.”
Garr says the move will have a snowballing effect on Tennessee’s economy.
“That’s $640 million pure state dollars,” Garr said. “That’s not dollars that can be met by drawing down some additional federal dollars. So every dollar the governor takes out of the program, that’s also taking two federal dollars out with it. But when you shift those dollars to local hospitals, that’s local money 100 percent. There’s no federal match that comes or goes with that.”