Communities across the nation such as Los Angeles, Denver, Las Vegas, San Francisco and Dallas are reeling from cuts in services to their community hospitals. As the federal government cuts provider payments and states and territories look for more areas to cut services in the wake of budget deficits, safety-net hospitals often are the target.
Many in these communities were surprised when they were faced with the real possibility that they could lose their local hospital. Yet recent trends show hospitals foundering as expenses rise and revenues decline due in part to the swelling ranks of the uninsured and government cutbacks. Although the demand for health care is rising as our population ages, the financial support for hospitals is decreasing, as budget deficits threaten the delivery of health care.
Here in the U.S.V.I., the administration's proposed fiscal year 2005 budget calls for a 10 percent cut in appropriated funds and an 8.5 percent cut in allotment for Roy L. Schneider Hospital. As the bill stands now, the hospital would receive $2 million less than it received in FY 2004, which represents a cut of 60 full-time positions in nursing and other medical personnel. The Legislature has an opportunity to avert this crisis in the upcoming week.
Today's modern hospital faces unparalleled cost and spending pressures in a quest to deliver high-quality medical services to its residents, many of whom cannot pay for the care they receive. These pressures, which other institutions do not have to face, are not fully accounted for by hospital critics. Just a few of these pressures are:
1. Health-care premium increases are outpacing the growth of health-care costs while insurer profits are on the rise. While insurance companies' profits rise, most hospitals are struggling just to meet their costs and break even.
2. Fewer private businesses are providing medical coverage to their employees than ever before, forcing more employees to pick up the tab. According to a new report by the Kaiser Foundation, just 66 percent of U.S. companies now provide medical coverage. Roughly a third of these that do provide health insurance require their workers to front annual deductibles ranging from $1,000 to $5,000 before payments kick in! As a result, hospitals are having a harder time getting the insured to cover their deductibles. This shift makes it harder for hospitals to ever get their bad debts back down to manageable levels.
3. The cost of providing quality health care is higher. Newer technologies, the critical shortage of key medical professionals, the need for capital investment, under-reimbursement from Medicare and Medicaid, and increased drug costs are just some of the factors contributing to this trend. For example, last fiscal year Schneider Hospital spent more than $1.7 million on pharmaceuticals, a 42 percent increase over the prior year.
4. Hospitals are being forced to rely more on contract nursing because of the national nursing shortage. In fiscal year 2003, Schneider Hospital spent over $6 million on contract nurses, a 20 percent increase over FY2002. We spend more money on contract nursing than any state on a per capita basis. If the territorial government were serious about reducing the cost of travel nurses, it would deliver on promises to create permanent nursing positions for the hospital.
5. The federal government hurts hospitals with unfunded mandates, such as the HIPPA law (Health Insurance Portability and Accountability Act), disaster preparedness and bioterrorism plans.
6. More hospitals are seeing an increasing load on their emergency rooms. According to a new report from the federal Centers for Disease Control and Prevention, the number of Americans seeking medical care in hospital ERs rose 23 percent in a 10-year period. This occurred during the same time hospitals were scaling back their ER departments! Schneider Hospital is no exception: from June 2003 to June 2004, we are projecting a total of 21,000 visits to our emergency room, an increase of 7.6 percent over a one-year period. And turning away patients is not an option to stem the tide of overflowing ERs, because federal law requires emergency rooms to accept everyone, regardless of their ability to pay.
7. Niche or specialty health-care providers are draining essential resources from community hospitals. People look to the mission of hospitals and physicians to be their safety net in times of crisis, regardless of their ability to pay. But specialty-care providers such as heart, orthopedic or other specialty facilities generally focus on patients and services with high payment rates yielding high margins. They undercut the ability of community hospitals to meet the needs of the broader community by drawing profitable services away from community hospitals, making it more difficult to support other critical services such as emergency rooms, dialysis centers and neonatal intensive care units.
8. Finally, the issue everyone knows is getting worse — the swelling ranks of the uninsured in America, now at 44 million. In our territory, more than 25 percent of all Virgin Islanders — many of them children — have no health insurance at all. When one adds the costs of treating illegal immigrants, our community has the highest uninsured rate in the nation. Last year, Schneider Hospital provided $14.3 million in uncompensated care, and, due to the Medicaid cap, we received only a small portion of reimbursement from the federal government.
Despite these challenges, our hospital has raised the standard of excellence by proving we can do more with less. Receiving the gold seal of approval from the Joint Commission on Accreditation of Healthcare Organizations last December was a huge step forward and a badge of honor for the whole territory. Yet we have to maintain that standard, and we cannot go back to the days when health care was not a top priority. Do we want to return to the days when patients had to bring in their own bed pans, linens, pillows and even their own medicines to the hospital?
Obviously, some remedies lie at the federal government level. We need a better payment system that adequately reimburses community hospitals for their costs, supports the special needs of rural hospitals, reduces the regulatory burden that hinders patient care, and reduces disparities in health care among the poor and minority populations. Territorial leaders should push for action on Delegate Donna M. Christensen's bill in Congress that would lift the cap on Medicaid payments to the territories and treat us the same as states where critical funding is needed. But locally we need insurance reform that addresses the problem of our working poor who cannot afford health insurance for their families.
The territorial government can also help our hospitals by providing access to needed capital. The territory's hospitals are unable to access the bond market independently, forcing them to finance capital improvements through hospital operating funds. Without this critical access to capital, we cannot adequately replace aging facilities and update critical-care technologies to meet changing patient demand.
All these changes can happen only if the community treats its health-care facilities as an investment — as a major economic driver. A strong community hospital stimulates the local economy by providing stable jobs, by purchasing goods and services from other local businesses, and by contributing to the local tax base. Schneider Hospital is not only one of the islands' largest employers; it is one of the reasons businesses and individuals choose to locate here.
Our hospital is an essential cornerstone of our community. Not only do we treat illnesses and injury, we work to improve your health with education and action. We are part of the public safety team you turn to in times of emergencies. Yet our mission is being threatened from all sides. I'm confident we can tackle these challenges head-on with the support of our political leaders, patients, and citizens. Working together, we can point to
our hospital as a source of pride and a vital safety-net you can turn to in critical periods of your life.
Editor's note: Rodney E. Miller Sr. is president and chief executive officer of Roy L. Schneider Hospital.
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