Health facility costs may double
By Katherine Nichols
Advertiser Staff Writer
Even before the Sept. 11 terrorist attacks, costs for bad debt and charity care at Hawai'i hospitals and nursing facilities were projected to nearly double from $52 million in 1998 to $93 million next year, according to a recent Ernst & Young study commissioned by the Healthcare Association of Hawai'i.
|Average income: $44,200|
|Additional findings of the recent Ernst & Young study of Hawai'i's hospitals commissioned by the Healthcare Association of Hawai'i:|
|||Hawai'i hospitals and nursing facilities employed 12,738 people in 2000 with an average income of $44,200, or 48 percent higher than the average wage in the state, which was $29,800.|
|||The number of hospital admissions increased 5 percent from 1996 to 2000 for a total of 104,273 admissions last year. The average length of stay fell slightly from 6.3 days in 1996 to 6.0 days in 2000.|
|||The number of long-term care admissions increased by about 37 percent from 4,577 in 1996 to 6,251 last year. The average stay was 216 days, down from 279 days in 1996.|
|||Hospitals incurred $18.9 million in unreimbursed costs for intern and resident teaching programs in 2000. The total cost of the programs was $31.9 million and $12.9 million was reimbursed through Medicare.|
|||Hospitals spent $20.7 million on community programs, including nutrition education, family planning, health fairs and counseling. Most of that cost was not reimbursed.|
"We're asking the state to pay their bills for the care we're providing to their citizens," said Rich Meiers, president and chief executive of the association. "We've never asked for new money. We're just asking them to put more money into the programs, like QUEST (medical insurance program for the needy) and Medicaid. They just haven't been paying for the full cost of care."
And now, with thousands of workers getting laid off and hospitals shouldering additional costs for increased security and disaster-preparedness since Sept. 11, health officials say the crisis could reach a critical stage for Hawai'i hospitals, many of which already had been losing money.
While specific projections are not available, Meiers said that if the state does not continue to extend insurance benefits for the newly unemployed, the number of uninsured patients will rise dramatically, decreasing payments to hospitals even more.
Even without this added burden, Meiers said the state needs to start taking responsibility for the health care of its residents.
"Each year the Legislature adds new benefits," said Meiers. "But it doesn't put any money in there to support them. This cannot go on forever. There's got to be some kind of improvement. We call ourselves the 'Health State,' and I don't think we deserve that title."
The association commissioned Ernst & Young to conduct the study two years ago after Congress passed the Balanced Budget Act of 1997, which reduced reimbursement to healthcare facilities for patients covered under Medicare. The study is also the first to analyze the impact on Hawai'i health facilities as a result of the changes in Medicaid reimbursement.
The report found that bad debt accumulated from uninsured patients who do not pay their bills hit $95 million last year. While the report projected that to drop to nearly $86 million this year, Meiers said the reduction reflects hospitals simply absorbing the debt and removing it from their books.
"There is an unrelenting amount of pressure on hospitals and healthcare providers over a long period of time, and there is a point at which the system starts to break," said Robert Rowland, chief executive of Straub Clinic and Hospital. "Then you see closures."
Straub Clinic and Hospital, Kapi'olani Medical Center for Women and Children, and Wilcox Memorial Hospital are scheduled to merge in a deal expected to be completed before the end of the year, said Rowland.
The result will be Hawaii Pacific Health. While the affiliation is a symbol of how difficult it has been for hospitals to survive on their own, Rowland hopes the new team will also reduce costs by streamlining its operation while providing better care.
Meiers said mergers have occurred more frequently on the Mainland in the past 10 years. But the pending deal the first of its kind in Hawai'i indicates the future of medicine.
"I don't think there is a hospital in Hawai'i that hasn't talked to another hospital about different forms of collaboration," said Meiers. "People just can't continue to operate as they have in the past. There will be a curtailment of services and a realignment of personnel."
Collaborations in recent years include a joint effort between St. Francis Medical Center and NeuroTechnologies International, which brought to Hawai'i a Gamma Knife used for inoperable brain tumors. St. Francis also shares a mobile MRI with Castle Medical Center and Wahiawa General Hospital.
An undertaking with Leeward Radiation Oncology provides radiation services for Kuakini and Queen's patients. Other endeavors between Kuakini and Queen's include Diagnostic Laboratory Services, which provides reference laboratory services as well as management services for hospital laboratories.
Many in the healthcare industry said they will be closely monitoring the success of the merger in hopes it offers possible solutions for other facilities as well.
"There is a high expectation that the quality of medicine be maintained," said Dr. Robert Schulz, former president of the board of directors and a plastic surgeon at Straub Clinic and Hospital. "And something eventually has to give."