Public hospitals to be hit hardest when TennCare cuts rolls
Mostly, they will just get moved around, with the taxpayers and patients with other medical coverage taking up the slack.
But for public hospitals — like the Regional Medical Center at Memphis and Nashville General at Meharry — such “cost-shifting” is difficult since they have fewer paying patients than other medical centers.
“If they’re already in financial difficulty, it will get worse unless the government can provide some kind of relief to them, and I’m talking about state and local government,” said University of Memphis economics professor Cyril Chang.
The Med, as the Memphis hospital is called, already provides $70 million worth of free medical care annually, and if TennCare cuts its rolls by 226,000 recipients as the governor has proposed, those “no-pay” costs will rise.
Bruce Steinhauer, the Med’s president, estimates losses from planned TennCare enrollment cuts at up to $11 million a year. With other proposed reductions in TennCare services, the total could climb to $17 million.
The Med has the major medical centers in the Memphis region for trauma, burns, newborn intensive care and high-risk pregnancy. It is the primary public hospital for the western third of Tennessee as well as parts of Mississippi and Arkansas.
The hospital weathered a money crisis two years ago that set off talk about cuts in medical services, but such drastic steps were avoided, largely because of increased financial help from the state.
Steinhauer said he isn’t sure how much state help the Med will need this time, and he declined talking about any renewed possibility of reduced services.
“We just about break even now,” he said. “We’ll have to make some accommodations, but we’re not at a point were we know what those would be … We’re pretty much down to essential services now.”
At Nashville General, increased costs from more uninsured patients are expected to exceed $5 million annually, based on the number of TennCare recipients it gets now.
“The unknown is how many patients who go to other hospitals will now come to ours because they don’t have insurance,” said Chief Executive Reginald Coopwood.
Nashville General has an annual budget of $100 million, with $36 million coming directly from Davidson County taxpayers.
The Med, with a budget of $250 million, gets about $31 million a year from Shelby County. Following years of negotiations, the Med now also gets around $7 million a year from Mississippi and $1.3 million from Arkansas.
In Chattanooga, Erlanger Medical Center, with operating revenues of $420 million, gets $3 million a year from Hamilton County. While Erlanger is also a public hospital, it has a stronger base of insured patients than the Med or Nashville General.
Erlanger expects to lose $10 million to $20 million because of TennCare cuts.
The expected cuts in TennCare rolls, which now total 1.3 million recipients, are part of Gov. Phil Bredesen’s efforts to keep the $8 billion program from devouring the state budget.
During the Med’s financial crisis in 2003, the state raised its $15 million contribution to the hospital to $21 million.
Bredesen proposes spending $180 million statewide to help former TennCare recipients find medical care and lessen the burdens on providers caused by the enrollment cuts.
While the federal government covers two-thirds of TennCare’s costs, Tennessee’s share amounts to 26 percent of state revenues.
The cuts along with reductions in services are unavoidable, Bredesen says, to save a system designed to provide medical insurance for thousands of Tennessee residents unable to qualify for Medicaid, the federal program for the poor.
Craig Becker, president of the Tennessee Hospital Association, said medical centers across the state will feel the pinch of TennCare cuts, but most will be able to cover at least some of their losses with income from privately insured patients and Medicare.
“The Med and (Nashville General) are probably the two prime examples of what negatives can happen in this case. For every person who goes off TennCare, there is no place for them to cost shift that to,” Becker said. “There are two places they can go, either to the county governments or the state — that’s about it, or they start shutting down services.”
Chang, the economist, said the Med, can also expect more uninsured patients who are unable to find care at other hospitals.
“Because of the fear of not getting accepted by a regular doctor or a clinic, they simply present themselves at the door of an emergency room at a county or city hospital,” he said.
Treating those patients is expensive, since “they usually delay seeking care until the pain or the suffering becomes unbearable,” Chang said.
Most Tennessee hospitals, whether for-profit or not-for-profit, already are working on plans for dealing with more uninsured patients, Becker said.
“Everybody’s going on the basis that this is going to happen,” he said. “If you’re a TennCare patient and you’ve got some kind of chronic disease, which a good number of the people coming off the rolls do, you’re going to still have to get care somewhere.”