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Patients' Free Care Costing Hospitals ; Moses Cone's $21.6 Million Increase May Mean Cutbacks on Equipment and Hiring.

Posted on: Tuesday, 26 July 2005, 00:00 CDT

The cost of uncompensated care provided by the Moses Cone Health System has more than doubled in four years.

Costs rose from $25 million in the 2000 fiscal year to $58.3 million in 2004. That might mean the nonprofit hospital would have to cut back spending on new equipment and capital investments, a Cone official says, unless the economy improves, unemployment drops or more employers offer health insurance to their employees.

Cone's increase, $21.6 million over the previous year, includes the cost of providing care for the uninsured, patients who renege on their debt, and Medicaid and Medicare patients. Uncompensated care is on the rise at High Point Regional, also a nonprofit, with hospital officials reporting an increase of more than 50 percent between 2003 and 2004.

"This puts increased pressure on the health system to support the kind of medical care this community expects," said Beth Ward, Cone's chief financial officer.

Factors such as unemployment and the number of employers that offer health-care benefits are creating the sharp increases that Cone and others are seeing, Ward said. According to a 2003 report by the Sheps Center for Health Services Research at UNC-Chapel Hill, more than 66,000 Guilford County residents below the age of 65 went without health insurance in 2003.

Michelle Mason, an eligibility and enrollment specialist for the Health Care Sharing Initiative, a nonprofit working with Moses Cone, said many uninsured patients would go without crucial health care if hospitals didn't provide some degree of free care. The result would be more visits to the emergency room, further contributing to the rise in health-care costs in general.

Regardless of the benefits , the effects of sharply rising uncompensated care could be felt in the hospital's ability to update medical equipment and technology.

"We would never run a piece of equipment that's unsafe, but if we couldn't buy a new piece of equipment after one is out of date, people would have to go out of area to receive a service or wait longer for a service," Ward said. "To me that's the real impact."

Moreover, the hospital might have to cut back on hiring.

"We will hire as many as we can hire," Ward said. "But we run very lean in terms of particularly our support personnel, our administrative personnel."

The trend also puts added pressure on private insurers, said Michelle Douglas, a spokeswoman for Blue Cross and Blue Shield of North Carolina. And that pressure could turn into higher premiums for consumers.

"(Hospitals) have a bottom line, but if they have patients who can't pay, then they have to try to recoup those losses somewhere," she said. "And private insurers are the only places they can go."

Douglas added that in the first quarter of 2005, the percentage increase on premiums has risen in the teens for groups and in the single digits for individuals.

The problem of rising costs is widespread, and all North Carolina is suffering.

Don Dalton, a spokesman for the N.C. Hospital Association, said virtually every hospital in the state is feeling the effects of a slow economy.

"People are either losing their jobs that had insurance, or the cost of insurance itself is going up and encouraging some smaller employers to drop coverage," Dalton said.

He added that the association is concerned about government programs such as Medicaid and Medicare. Potential cuts in coverage for those with dual Medicaid and Medicare eligibility are being discussed by state legislators during budget negotiations.

Sen. Kay Hagan, a Democrat from Guilford County, said a change would help North Carolina counties struggling to fund Medicaid.

"If there's a way to have health care provided for that person but do it under one or the other (Medicaid or Medicare), it would ultimately save the counties funding - Guilford County and the state of North Carolina," she said.

Dalton said he is concerned about the proposed cuts, but he would ultimately like to see Medicare and Medicaid fully fund the cost of care for those they already covered.

"If we were to wave a magic wand, one of the first things we would ask is for government programs that cover a specific number of beneficiaries to adequately cover the costs of those beneficiaries," he said.

Only 80 percent of the cost of outpatient care is reimbursed by Medicaid.

Across North Carolina, the cost of uncompensated care jumped 26 percent between the 2003 and 2004 fiscal years - a significant increase, Dalton said.

And while about a third of all hospitals in the state are operating at a deficit, 43 percent are working under narrow margins - between zero percent and 5 percent. While Moses Cone strives to maintain a 5 percent operating margin to cover capital expenditures and personnel needs, it has about a 3.6 percent margin, Ward said.

About 7,500 people work directly for the Moses Cone Health System, highlighting the impact hospitals can have on a community.

"We're always there," Dalton said. "We're not going to move our jobs to Mexico. But when margins narrow or disappear, then hospital leaders have to make very difficult choices about the services they can provide."

Contact Kavita Pillaiat 373-7091 or kpillai@news-record.com

Source: Greensboro News Record

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