LMH expects gains if Medicaid expansion is approved, but warns it will take effort to get people to sign up

photo by: Chris Conde

Lawrence Memorial Hospital, October 2018.

It may involve trading some pennies for dollars, but LMH Health leaders are confident Medicaid expansion in Kansas will add several million dollars to the hospital’s finances — if state lawmakers ultimately approve the expansion plan.

As part of the proposal crafted by Democratic Gov. Laura Kelly and Senate Majority Leader Jim Denning, R-Overland Park, hospitals will pay a “surcharge” to the state for every resident who enrolls in Medicaid as part of the expansion plan. Russ Johnson, president and CEO of LMH, is estimating LMH would pay about $1 million in surcharge fees. The fees will be used by the state of Kansas to help cover its costs of expanded Medicaid.

But Johnson thinks LMH could see upward of $3 million to $6 million worth of improvements to its finances, as Medicaid expansion likely would provide coverage to a large number of the approximately 10,000 Douglas County residents who don’t have health insurance.

“It would be a significant improvement,” Johnson said of the financial impact to the hospital.

Members of the LMH Health board of trustees received an update on the pending Medicaid proposal at their Wednesday morning meeting. Johnson, though, said one thing is critical for making this plan work for the hospital.

“The key to this is getting people to take advantage of it,” he said.

If Medicaid expansion is approved by state legislators, area residents will still have to sign up for the new insurance coverage. If they don’t, the hospital still would be faced with providing costly services to the uninsured.

Board members told hospital leaders to be proactive in reaching out to the uninsured once it becomes a certainty that the expansion will occur. That likely will include the hospital going through its files to see patients who have had previous procedures at the hospital without insurance. Hospital officials could reach out to those individuals directly.

Community events where information is provided are also likely, as is outreach through some social service agencies that serve the homeless or other low-income individuals. The hospital already employs a vendor who helps people who come to the emergency room or an LMH doctor’s office determine whether they qualify for Medicaid or other such services. The hospital would continue to offer that service. Some board members said such services might be able to be expanded using area residents who were trained to be health care advisers during the launch of the Affordable Care Act several years ago.

Hospital officials said they also expected that the three private health insurance companies the state has selected to provide services to Medicaid consumers will hold informational fairs and other such events in the community. Those three providers are Aetna, Sunflower Health Plan and UnitedHealthCare. Helping consumers understand the differences between those three insurance providers also will be something LMH or some other local organization should do, several hospital leaders said.

“Not all three providers are the same,” Deb Cartwright, the hospital’s new chief financial officer, told the board.

She said the providers have different track records when it comes to denying or approving certain types of claims. She said it would be to the benefit of consumers to understand that information before choosing a provider.

None of this will matter, though, unless state legislators approve the proposal put forward by Kelly and Denning. Statehouse watchers expect the plan to win approval, given the endorsement from the Republican majority leader. Tom Sloan, an LMH board member and former state representative from Lawrence, said he also expected the proposal to win approval, though not quickly.

“It won’t be approved by the end of February,” he said.

Sloan predicted the Senate may approve the plan rather quickly, but it will get tied up in the Kansas House of Representatives.

“The House will sit on it, and it will be tied to other issues,” Sloan predicted. “The abortion issues are likely. Ultimately it will pass, but it will be kind of a tortuous process.”

If the expansion does win approval, Johnson said area residents who currently are avoiding receiving medical services because of the cost would be the biggest winners.

“When you don’t have any coverage, just imagine how much that makes you hesitate to get any kind of care,” Johnson said. “People will be going from that situation to going on Medicaid, which is actually very good coverage. It covers a lot. It will be a big transformation.”

Johnson said he was not worried about the hospital’s services being put under strain by a rush of people who previously haven’t been in the health care system.

“We have the primary care and other services here to accommodate that,” he said. “We are going to welcome providing them care.”

In other news, the hospital board:

• Received a report on the hospital’s finances. As reported throughout the year, the hospital is expected to post a significant operating loss in 2019. December financial statements were not ready to present to the board. The board, though, received November financials that showed the hospital had an operating loss of about $3.1 million for the month.

LMH is a nonprofit hospital, but relies on having revenues exceed expenses to have income to invest back into hospital operations. Over the past decade, the hospital typically has seen revenues exceed expenses by several million dollars a year. Through November, the hospital has posted a $13.7 million operating loss.

The hospital has hired a consulting firm that has recommended a number of operational changes to improve efficiency. Cartwright, the new CFO who has been on the job for about 30 days, said she also was conducting her own reviews, including making sure staffing matched up with the hospital’s patient volumes. The hospital is budgeting to have revenues slightly over expenses in 2020.

“I think 2020 will be challenging,” she said. “I don’t want to sugarcoat it.”

But she also told the board that she thought LMH had “all the ingredients of a successful, sustainable health system.”

Correction: A previous version of this story incorrectly identified the city represented by Sen. Jim Denning. He represents Overland Park as part of Senate District 8.


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