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Lawrence Memorial Hospital braces for cuts from Affordable Care Act

September 18, 2013

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With a major piece of the Affordable Care Act set to go into effect in less than two weeks, Lawrence Memorial Hospital is bracing for cuts in revenue resulting from the 2010 law and the state of Kansas' subsequent decision to not participate in its Medicaid expansion.

During negotiations over the legislation, hospital associations agreed to reduce Medicare payments to help fund the increase in insured Americans, with the planned Medicaid expansion expected to make up for some of that lost revenue. However, after the U.S. Supreme Court ruled last year that states could opt out of loosening their Medicaid eligibility requirements, several, including Kansas, did.

So under the Affordable Care Act, Lawrence Memorial Hospital will not get its annual Medicare reimbursement increase in 2014, projected at about $2.7 million, CEO Gene Meyer said at today's LMH Board of Trustees meeting. Meanwhile, if Kansas had expanded its Medicaid program, the hospital would have received an additional $1.1 million in revenue.

"The numbers are going to be real next year," Meyer said. "The rate of increase we're not going to get is significant."

Another worry for LMH is that the cheapest plan being sold on the online health insurance exchange in Kansas, the bronze plan — there are also silver, gold and platinum versions — pays only 60 percent of costs, with the remaining 40 percent left to the patient.

"We've got folks who are going to choose this plan because of the low premium. Their ability to make up that 40 percent difference may be suspect," Meyer said. "We're very concerned about that from a … financial standpoint about what that will do to our (accounts receivable) and bad debt activities."

Still, he said, many people remain uninformed about the insurance exchanges, which begin open enrollment Oct. 1, and said the penalty for not having health insurance next year ($95 per person) will not be enough to deter people from going without it.

"The closer we get to this the more I believe ... that I don't think we're going to see much of an impact in 2014," Meyer said. "But it's here and I think we can choose to look at this as an opportunity to move forward … so here we go."

With that said, Chief Financial Officer Joe Pedley reported that he and his staff continue to work diligently on next year's LMH budget, which he expects will include a significant decrease in capital projects. "I don't think it's going to be any surprise that this year's going to be a really challenging budgeting year," he said.

In other business at today's Board of Trustees meeting:

—Kathy Clausing-Willis, vice president/chief development officer for LMH, announced that the recent Perry Jones Open golf tournament in Lawrence had 350 golfers and raised $115,000 for the LMH Endowment Association, an increase over last year. The annual event has brought in a total of $1.3 million for LMH. "It really is a way we come together as a community, even if you don't play golf, to support the hospital," Clausing-Willis said.

—Sheryle D'Amico, vice president of the hospital's physicians division, said LMH continues to actively recruit endocrinologists and rheumatologists in Lawrence, two medical specialties the community needs. She added that LMH recently signed on a new oncologist and a new neurologist is joining an existing practice in town.

Comments

Sam Crow 7 months ago

May I suggest that all you selfprofessed experts in health care financing attend a hospital board meeting and explain to them why Gene Meyer, who has over 30 years experience, is wrong in his budget projections.

Since LMH is community owned, you have an obligation extend to them your expertise and show them where they are miscalculating. The Board of Trustees meets at 9 a.m. the third Wednesday of the month in the LMH Auditorium. Meetings are open to the public.

And while you are there chootspa, you can ask, since LMH is “making money hand over fist”, where all the money is going since, being a nonprofit, there is no way disperse the extra dollars.

And, anotherview can demonstrate the proper way to interpret and analyze a financial report.

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Carol Bowen 7 months ago

OiDan, Ohio has not adopted expanded Medicaid and defaulted to the federal insurance exchange. They are in the same predicament as Kansas. The difference is that Ohio is still discussing its options and the governor supports Medicaid expansion.

Here's a thought. Why is a representative from Kansas pleading his case before Congress? Kansas knew or should have known the consequences of its decision. Even though I live in Kansas, I do not believe fedgov should bail the state out for a problem of its own making. We could have chosen differently. We wanted to be separate. So be it.

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OlDan 7 months ago

LMH is not the only hospital dealing with Obamacare cuts. Cleveland Clinic has a much bigger problem.

"Administrators at the Cleveland Clinic announced on Wednesday that the health care giant would be cutting as much as $300 million from its 2014 budget, and that the cuts will likely include layoffs."

"Health care reform has really changed things, and the burden of cost is going to be falling on patients," spokeswoman Eileen Shiel told The Plain Dealer. "We want to make sure we can keep care affordable."

http://www.usnews.com/news/articles/2013/09/18/citing-obamacare-cleveland-clinic-to-cut-300m-warns-of-layoffs

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Carol Bowen 7 months ago

"...Lawrence Memorial Hospital will not get its annual Medicare reimbursement increase in 2014, projected at about $2.7 million..."

Are we talking about a cut in Medicare reimbursement or a lost increase? Will LMH get the same Medicare reimbursement as last year?

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fmrl 7 months ago

If you want to stay healthy keep away from orthodox medicine. People use it as a first resort. It should be used as a last resort.

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solsken66 7 months ago

There are people working at that hospital who are not employees of LMH, but rather the hospital uses a third party entity. Yes, those individuals do not get benefits from LMH.

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funnygirl26 7 months ago

Most of you don't realize how much LMH write off to bad debt or charity each and every year and most of those people can afford to have health insurance and use our ER as their local doctor office. This Affordable care act is going to be tough on all providers. NO thanks to Mr. Brownback... All the providers that agreed to take the cut in Medicare payments was under the impression there would be MORE people with health insurance and hoping that would balance out... and NOW Sam Brownback put a stop to that!
And health insurance even if you work at the hospital is costly especially if you have to pay for family coverage. Most companies insurance cost increase each year but our salary does not... so I now make less money today because of the cost of my health insurance.

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MrSpudboy 7 months ago

I don't know why anyone working for LMH doesn't have healthcare. There is a copay with their insurance. Is that why btsflk made that statement? That copay has gotten bigger, over the years, just like everyones has that gets insurance through their work.

I don't know what sunny is talking about. I suspect sunny doesn't either.

Hopefully grammaddy, that will not be a problem, but folks that need to purchase insurance need to start thinking about it. No reason to jump on it Oct1. I don't think there is any reason one can't keep the policy they already have.

What do folks expect to happen? The sky is not falling. The commies are not waiting at the gates.

I don't know why Meyer is worried about the plans cover, as folks that get the cheap plans, probably don't have insurance anyway.

What he is really worried about are the Medicare reimbursements, the new coding, and the new charging structures they will have to work with. They are going to have to be able to tell you why that band-aide cost 10 bucks. Hospitals have not been held accountable to that standard...um like forever. Its new ground for them. The new budget will be tough, because they have to figure out why they have to charge 10 bucks for the band-aide.

You may wonder why hospitals just didn't do this to begin with. The answer being that it was much easier to just work from the bottom line backward.

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Karl_Hungus 7 months ago

"Lawrence Memorial Hospital is bracing for cuts in revenue resulting from the 2010 law and the state of Kansas' subsequent decision to not participate in its Medicaid expansion."

That is on Brownback...he was praying that Romney would have won and turned down the money thinking that universal health care for all Americans would not fly (even though it is a law)

Thanks Brownback!!!

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Centerville 7 months ago

Go to healthcare.org on Oct 1. There you can renew the same policy you have this year, but will pay at least $2,500 less for it in 2014. That's the promise. I can hardly wait.

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btsflk 7 months ago

and there are those working for LMH who have no healthcare ins

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anotherview 7 months ago

I think there's more to this story than the two examples the Mr. Meyer stated. I suggest that people read the 2012-2011 Mid-Year Report of Lawrence Memorial Hospital that was inserted in the Lawrence Journal World a few days ago.

On page 16 of this report are the Financial Highllights for 2012 and 2011. In 2012, the hospital provided Charity care of $12,595,000. and provided for uncolllectible accounts of $18,227,600. Combined, this is over $30,000,000. of services that the hospital provided without receiving any payment. If everyone had health insurance, this is additional revenue that the hospital does not now collect. That $30,000,000 is nearly four times the hospitals net income. So the hospital could have a huge surge in income or perhaps reduce their fees to everyone else, which would result in a decrease in all of our health insurance premiums.

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akt2 7 months ago

Congratulations to all the nurses that will be retiring this year. You won't have to worry about budgets or staffing issues.

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MrSpudboy 7 months ago

Meyer doesn't have any more of an idea what will happen than does anyone else. This is the line that the hospital lobby takes every time there is any sort of change, or rumored change to the heath care system. You should have heard em yell that the sky is falling when Clinton got elected. Hospitals will not be able to lump cost into room rates, or exorbitant charges for procedures and supplies. They will have to justify their charges, and thats what scares the hell out of them. Some of the highly paid executive staff might actually have to do some real work for a change. That is unfortunate for them, because hospital administrators were educated in a world where that sort of work wasn't necessary. They will, however, scare the hell out of the people that actually do the work. "We are going to have to work smarter!" they will shrilly exclaim. "Gonna have to get rid of the deadwood!" We have met the deadwood, and it is them.

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Catalano 7 months ago

And then there are those who would have been covered by the Medicaid expansion because they're too POOR to qualify for a federal subsidy, i.e. under 100% of the poverty level. If one of those people have a catastrophic event, the hospital's charity program will have to kick in. More losses, thanks to our illustrious governor and cronies.

I do wonder if Mr. Meyer testified before the legislature about his concerns.

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Kent Kossoy 7 months ago

Okay. So they will lose $2.7 million from Medicare because of the ACA. But with Medicaid they would have received $1.1 million. Still a loss overall. Obamacare will bankrupt an already losing system....just faster. Stop blaming Bush.....or other republicans.

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weeslicket 7 months ago

agree.

1st paragraph again: ... (1) Lawrence Memorial Hospital is bracing for cuts in revenue resulting from the 2010 law and (2) the state of Kansas' subsequent decision to not participate in its Medicaid expansion.

3rd paragraph: (1) So under the Affordable Care Act, Lawrence Memorial Hospital will not get its annual Medicare reimbursement increase in 2014, projected at about $2.7 million... and... (2) if Kansas had expanded its Medicaid program, the hospital would have received an additional $1.1 million in revenue.

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cowboy 7 months ago

Mr. Meyer , Even at 60% reimbursement your hospital will be better off for every newly covered patient that enters your hospital as opposed to no reimbursement i.e. write off. Medicare is another question , I don't recall that I have heard you or your counterparts speaking loudly to the legislature or the illustrious governors office. Why so quiet ?

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