More Medicaid patients means bigger risk
By Mark Reaman
Rural health care in the state got a scare this spring as a result of Colorado legislative budget negotiations but Gunnison Valley Health appeared positioned to weather the storm. The question remains…when will the storm blow up again?
In an effort to balance a spending bill, the state legislature had considered cutting more than $500 million in payments to the state’s hospitals for uncompensated care. Now that money is being redirected out of the state general fund and into an enterprise fund not impacted by the TABOR (Taxpayer Bill of Rights) restrictions so the major cuts don’t appear to be likely.
“Thankfully we are not in the type of dire situation that some [are], due to proactive work from the finance department in light of the proposed cuts,” explained GVH marketing director Tyler Hansen.
“The cut would affect hospitals differently based upon their payer mix,” added Thomas Harvey, chief financial officer of GVH. “Here at Gunnison Valley Health we have experienced a continuing increase in the number of Medicaid patients we serve, now approaching 24 percent of patients treated. The higher the percentage of Medicaid patients, the greater the impact from the proposed cuts. If the Hospital Provider Fee [HPF] were to stay in the general fund and be subject to TABOR, we estimate the proposed cuts could cost the hospital approximately $300,000 a year.”
GVH’s chief executive officer Rob Santilli agreed that the local hospital will take a hit, but it is prepared. “If the proposed cut to the HPF were to go through, multiple rural hospitals throughout the state, including some of Denver’s most needed hospitals, would find themselves at risk of having to shutter their doors. Here at GVH, I am confident in our current financial standing,” he said. “Proactive work from our finance department anticipating such cuts puts us in a position to weather storms that many other health systems cannot.”
“The original proposal from lawmakers placed the onus of balancing the state budget largely upon hospitals throughout Colorado by makings cuts to the hospital provider fee,” said Hansen. “The pain of those cuts would be exacerbated by the loss of matching federal dollars.”
“We strongly favor the state legislature removing the Medicaid HPF from the general fund and putting it into an enterprise fund,” said Harvey. “Such a move would protect the funding we currently receive and help support the patients with the greatest financial need. It also reduces the uncertainty as we evaluate new services and projects like a new state-of-the-art nursing home, an orthopedic center of excellence, or additional cancer services.”
“The cuts to the HPF, as originally proposed, would have been painful for us as a health system but thankfully would not have put us at risk,” summarized Hansen. “By moving the HPF to an enterprise fund, as is now proposed and awaiting a signature from the governor, we are at a lower risk of facing a financial impact as a result of losing some or all of the HPF in the coming years due to cuts.”