An Analysis of Community Benefit of An Analysis of Community Benefit of Montana HospitalsMontana Hospitals

Presented by:Presented by:

MHA…An Association of Montana Health MHA…An Association of Montana Health Care ProvidersCare Providers

What should you gain from this?What should you gain from this?

Better understanding of benefit of Better understanding of benefit of community hospitalcommunity hospital

Better understanding of financial impacts of Better understanding of financial impacts of unfunded careunfunded care

Greater appreciation for services provided Greater appreciation for services provided by hospitalby hospital

Areas of FocusAreas of Focus

Unfunded CareUnfunded Care– Charity CareCharity Care– Bad DebtBad Debt– Government ShortfallsGovernment Shortfalls

Economic ImpactEconomic Impact– Providing more than health careProviding more than health care

EducationEducation– Future professionals developed todayFuture professionals developed today

More than just health careMore than just health care Montana hospitals play many roles in their Montana hospitals play many roles in their

communitiescommunities– Direct service providersDirect service providers– Large employersLarge employers– Community partnersCommunity partners– Sources of volunteersSources of volunteers– EducatorsEducators

Mission StatementMission Statement

According to the 2005 AHA survey, According to the 2005 AHA survey,

93% of Montana hospitals 93% of Montana hospitals

have a focus of community benefit have a focus of community benefit

in their mission statements. in their mission statements.

Types of Community BenefitTypes of Community Benefit

Caring for the indigent Caring for the indigent populationpopulation– Charity CareCharity Care

Caring for the Caring for the uninsured and uninsured and underinsuredunderinsured– Bad Debt and Charity Bad Debt and Charity

CareCare

Community Education Community Education and Outreachand Outreach

Wellness examsWellness exams

Support groupsSupport groups

Immunization programsImmunization programs

ClinicsClinics

Patient EducationPatient Education

Unfunded CareUnfunded Care

Charity CareCharity Care

- Care provided for people who do not have the means to Care provided for people who do not have the means to pay. pay.

- ““The giving of services because of human need The giving of services because of human need regardless of ability to pay.”regardless of ability to pay.” Dennis O’Malley, Craig Hospital Dennis O’Malley, Craig Hospital

Rural Charity CareRural Charity Care

$0

$5

$10

$15

$20

1997 1998 1999 2000 2001 2002 2003 2004 2005

Charity Care Provided by Rural Hospitals(in millions)

Charity Care figures from Annual AHA survey for Montana hospitals.

Urban Charity Care Urban Charity Care

$0

$10

$20

$30

$40

$50

1997 1998 1999 2000 2001 2002 2003 2004 2005

Charity Care Provided by Urban Hospital(in millions)

Charity Care figures from Annual AHA survey for Montana hospitals.

Statewide Charity CareStatewide Charity Care

$0

$10

$20

$30

$40

$50

$60

1997 1998 1999 2000 2001 2002 2003 2004 2005

Charity Care Provided by All Montana Hospitals(in millions)

Charity Care figures from Annual AHA survey for Montana hospitals.

What This Means…What This Means…

MT Statewide, a 248% Increase in 9 years for MT Statewide, a 248% Increase in 9 years for Charity CareCharity Care– $17.1 M in 1997$17.1 M in 1997– $59.5 M in 2005$59.5 M in 2005

What is causing this increase?What is causing this increase?– Increase in health care costsIncrease in health care costs– Decrease in employer coverageDecrease in employer coverage

Programs Can Be Affected by Programs Can Be Affected by Increasing Charity CareIncreasing Charity Care

When charity care burdens are When charity care burdens are too high, other community too high, other community benefit programs may have to benefit programs may have to be reduced in scope or be reduced in scope or curtailed.curtailed.

A facility may have to reduce A facility may have to reduce services that don’t pay their own services that don’t pay their own way to preserve the core way to preserve the core services valued by the services valued by the community.community.

Public Misconceptions About Public Misconceptions About Charity CareCharity Care

““It’s their own fault. It’s not my problem.”It’s their own fault. It’s not my problem.” Charity care patients are just too lazy to get Charity care patients are just too lazy to get

insurance or a jobinsurance or a job Often labeled as “no-goods”Often labeled as “no-goods” If you walk into the emergency room, you If you walk into the emergency room, you

will get treated even if it’s not an emergencywill get treated even if it’s not an emergency This is changing in many facilitiesThis is changing in many facilities

Truths About Charity Care Truths About Charity Care PatientsPatients

Many patients face “health care versus food”Many patients face “health care versus food”

Charity care patients often barely make Charity care patients often barely make enough to survive without health care costsenough to survive without health care costs

The majority of the uninsured and The majority of the uninsured and underinsured have jobs but no employer underinsured have jobs but no employer coveragecoverage

What is Bad Debt?What is Bad Debt?

““The uncollected charges for care to patients The uncollected charges for care to patients who are believed to have the financial ability who are believed to have the financial ability to pay at the time the care is provided, but to pay at the time the care is provided, but don’t pay.”don’t pay.”

Bad Debt continued…Bad Debt continued…

$0

$10

$20

$30

$40

$50

$60

1997 1998 1999 2000 2001 2002 2003 2004 2005

Bad Debt Incurred by Rural Hospitals(in millions)

Bad Debt figures from Annual AHA survey for Montana hospitals.

More Bad Debt…More Bad Debt…

$0

$10

$20

$30

$40

$50

$60

1997 1998 1999 2000 2001 2002 2003 2004 2005

Bad Debt Incurred by Urban Hospitals (in millions)

Bad Debt figures from Annual AHA survey for Montana hospitals.

Bad Debt StatewideBad Debt Statewide

$0

$20

$40

$60

$80

$100

$120

1997 1998 1999 2000 2001 2002 2003 2004 2005

Bad Debt Incurred by All Montana Hospitals(in millions)

Bad Debt figures from Annual AHA survey for Montana hospitals.

% Increase in Bad Debt at Every % Increase in Bad Debt at Every LevelLevel (1997-2005)(1997-2005)

150% - Urban150% - Urban

105% - Rural105% - Rural

142% - Statewide142% - Statewide

Cause Cause EffectEffect

Insurance premiums Insurance premiums continue to risecontinue to rise

Employers can not cover Employers can not cover premiumpremium– Leaves patient with greater Leaves patient with greater

expenseexpense

Self –employed and part-time Self –employed and part-time employees can not afford employees can not afford premiumspremiums– In 2006, one typical health In 2006, one typical health

insurance policy in MT cost insurance policy in MT cost $1,435/yr for healthy 25 year $1,435/yr for healthy 25 year old and $2892 for a healthy old and $2892 for a healthy 55 year old, but each faces 55 year old, but each faces a $5,000 deductible.a $5,000 deductible.

CauseCause EffectEffect

Insurance and Insurance and government program government program regulations are regulations are becoming more strictbecoming more strict- i.e.: patient is allowed - i.e.: patient is allowed

one colonoscopy per one colonoscopy per yearyear

Patients who are Patients who are concerned about their concerned about their health end up paying health end up paying out-of-pocket for out-of-pocket for additional proceduresadditional procedures

Working poor do not Working poor do not qualify for Medicaidqualify for Medicaid– Not enough money in Not enough money in

CICP to cover everyoneCICP to cover everyone

Contrary to Popular Opinion…Contrary to Popular Opinion…

In 2003, more than 80% of all uninsured In 2003, more than 80% of all uninsured adults nationally whose incomes fell adults nationally whose incomes fell below 200% of federal poverty level below 200% of federal poverty level

were deemed ineligible for Medicaid and were deemed ineligible for Medicaid and other public health insurance programsother public health insurance programs

Who’s Uninsured in Colorado and Why?Who’s Uninsured in Colorado and Why?, Families USA, November 2003, Families USA, November 2003

Federal Poverty Level 2006Federal Poverty Level 2006

Single personSingle person– $9,800/year$9,800/year– $19,600/year (200%)$19,600/year (200%)

Two person familyTwo person family– $13,200/year$13,200/year– $26,400/year (200%)$26,400/year (200%)

Family of threeFamily of three– $16,600/year$16,600/year– $33,200/year (200%)$33,200/year (200%)

Family of fourFamily of four– $20,000/year$20,000/year– $40,000/year (200%)$40,000/year (200%)

Thoughts from Around MontanaThoughts from Around Montana

““A better informed public and a willingness on their parts to access A better informed public and a willingness on their parts to access care as appropriately as possible could make for a healthier population care as appropriately as possible could make for a healthier population

and the potential for reducing some bad debtand the potential for reducing some bad debt.” .”  Kay Wagner, Patient Kay Wagner, Patient

Business Services, St. Vincent Healthcare. Business Services, St. Vincent Healthcare.

““Our bad debt expense has grown significantly in the past few years, Our bad debt expense has grown significantly in the past few years,

and finding a workable solution is a top priority.”and finding a workable solution is a top priority.” Kim Lucke, Director of Kim Lucke, Director of Finance, Northern Montana HospitalFinance, Northern Montana Hospital

““With the increase in the number of patients that are uninsured and With the increase in the number of patients that are uninsured and underinsured, hospitals must be "creative" in the collection of Accounts underinsured, hospitals must be "creative" in the collection of Accounts Receivable to manage bad debts. Hospitals are sensitive to people Receivable to manage bad debts. Hospitals are sensitive to people paying their medical bills; however, hospitals must collect for payment paying their medical bills; however, hospitals must collect for payment of medical services to ensure financial viability and maintain quality of medical services to ensure financial viability and maintain quality services.” services.” Jim Shelton, Manager, Patient Business Services, Benefis HealthcareJim Shelton, Manager, Patient Business Services, Benefis Healthcare

Total Uncompensated CareTotal Uncompensated Care

Combination of charity care and bad debtCombination of charity care and bad debt

Generally grouped togetherGenerally grouped together

Difficult to distinguish one from the otherDifficult to distinguish one from the other

Rural Uncompensated CareRural Uncompensated Care

$0

$10

$20

$30

$40

$50

$60

1997 1998 1999 2000 2001 2002 2003 2004 2005

Total Uncompensated Care Provided by Rural Hospitals (in millions)

Rural Uncompensated Care figures from Annual AHA survey for Montana hospitals.

Urban Uncompensated CareUrban Uncompensated Care

$0

$20

$40

$60

$80

$100

$120

1997 1998 1999 2000 2001 2002 2003 2004 2005

Total Uncompensated Care Provided by Urban Hospitals (in millions)

Urban Uncompensated Care figures from Annual AHA survey for Montana hospitals.

Statewide Uncompensated CareStatewide Uncompensated Care

$0

$50

$100

$150

$200

1997 1998 1999 2000 2001 2002 2003 2004 2005

Total Uncompensated Care Provided by All Montana Hospitals (in millions)

Statewide Uncompensated Care figures from Annual AHA survey for Montana hospitals.

What Can be Done to Reduce What Can be Done to Reduce Uncompensated Care?Uncompensated Care?

Lobby local, state and federal governments for increased Lobby local, state and federal governments for increased allocationsallocations

Increased endowments and contributions from community Increased endowments and contributions from community groupsgroups

Continued consumer education regarding over-utilization Continued consumer education regarding over-utilization and abuse of health care systemand abuse of health care system– Not using Emergency Department as primary care for non-Not using Emergency Department as primary care for non-

emergenciesemergencies Increased coverage by employers/insurance reformIncreased coverage by employers/insurance reform

– Include part-time employees under coverageInclude part-time employees under coverage– More affordable to small businessesMore affordable to small businesses

Government ProgramsGovernment Programs

MEDICAREMEDICARE Federal programFederal program Larger, general acute care Larger, general acute care

hospitals are paid at a hospitals are paid at a predetermined rate for 511 predetermined rate for 511 categories of illnesscategories of illness

Payment is same for each Payment is same for each patient within specific patient within specific category no matter the category no matter the level of care providedlevel of care provided

Critical Access Hospitals Critical Access Hospitals are paid 101% of their are paid 101% of their reasonable costs.reasonable costs.

MEDICAIDMEDICAID State programState program Larger, general acute care Larger, general acute care

hospitals are paid at a hospitals are paid at a predetermined rate for 511 predetermined rate for 511 categories of illnesscategories of illness

Payment is same for each Payment is same for each patient within specific patient within specific category no matter the category no matter the level of care providedlevel of care provided

Critical access hospitals Critical access hospitals are paid 101% of their are paid 101% of their reasonable costs.reasonable costs.

Medicare and Medicaid ShortfallsMedicare and Medicaid Shortfalls

Shortfall – difference between what the Shortfall – difference between what the hospitals charge for services and the hospitals charge for services and the

payment received for care givenpayment received for care given

Rural Medicare/Medicaid Rural Medicare/Medicaid ShortfallsShortfalls

$0

$50

$100

$150

$200

$250

1997 1998 1999 2000 2001 2002 2003 2004 2005

Combined Rural Medicare & Medicaid Discounts (in millions)

Rural Medicare & Medicaid figures from Annual AHA survey for Montana hospitals.

Urban Medicare/Medicaid Urban Medicare/Medicaid ShortfallsShortfalls

$0

$100

$200

$300

$400

$500

$600

1997 1998 1999 2000 2001 2002 2003 2004 2005

Combined Urban Medicare & Medicaid Discounts (in millions)

Urban Medicare & Medicaid figures from Annual AHA survey for Montana hospitals.

Statewide Medicare/Medicaid Statewide Medicare/Medicaid ShortfallsShortfalls

$0

$200

$400

$600

$800

1997 1998 1999 2000 2001 2002 2003 2004 2005

Combined Statewide Medicare and Medicaid Discounts (in millions)

Statewide Medicare & Medicaid figures from Annual AHA survey for Montana hospitals.

Montana Hospitals Help Fund Montana Hospitals Help Fund Medicaid PaymentsMedicaid Payments

Beginning in 2003 hospitals have paid a fee for Beginning in 2003 hospitals have paid a fee for each inpatient bed day to help fund Medicaid.each inpatient bed day to help fund Medicaid.

The fees are matched with federal Medicaid The fees are matched with federal Medicaid dollars to help boost Medicaid payments.dollars to help boost Medicaid payments.

The project has helped reduce the gap between The project has helped reduce the gap between what Medicaid pays hospitals and the cost to what Medicaid pays hospitals and the cost to provide care to program beneficiaries.provide care to program beneficiaries.

This means lower health costs for other This means lower health costs for other Montanans.Montanans.

How payment shortfalls can impact How payment shortfalls can impact patient carepatient care

Community programs cease to existCommunity programs cease to exist

Cost-shift from hospital to insurance to employer to patientCost-shift from hospital to insurance to employer to patient

Hospitals becoming less willing to take Medicare/Medicaid Hospitals becoming less willing to take Medicare/Medicaid patientspatients

Potential for trauma programs and other facilities to closePotential for trauma programs and other facilities to close

Hospitals are becoming unable to expand patient servicesHospitals are becoming unable to expand patient services

Additional CommunityAdditional Community BenefitBenefit

Other Community BenefitOther Community Benefit

Community ProgramsCommunity Programs– Available to all patient populationsAvailable to all patient populations

Economic ImpactEconomic Impact– More than “just a paycheck”More than “just a paycheck”

EducationEducation– Future faces of health careFuture faces of health care

Community ProgramsCommunity Programs

Community ProgramsCommunity Programs

Community programs offered at little Community programs offered at little or no cost to the patients, will begin or no cost to the patients, will begin to decrease non-necessary hospital to decrease non-necessary hospital

visitsvisits

Programs Offered by Montana Programs Offered by Montana HospitalsHospitals

Free/discounted Free/discounted preventive screeningspreventive screenings

School-based clinicsSchool-based clinics Senior companion Senior companion

programsprograms Free child car seat Free child car seat

checkschecks Prenatal exams for Prenatal exams for

underserved underserved populationspopulations

Financial Implications of Financial Implications of Community Benefit ProgramsCommunity Benefit Programs

Montana hospitals provide steep price discounts to Montana hospitals provide steep price discounts to support the CHIP program. Lower prices means support the CHIP program. Lower prices means more children can obtain coverage.more children can obtain coverage.

Many programs throughout the state are big Many programs throughout the state are big money losers but hospitals continue to provide money losers but hospitals continue to provide them as best they can.them as best they can.

Hospitals are becoming the primary access point Hospitals are becoming the primary access point for more low income Montanans.for more low income Montanans.

Economic ImpactEconomic Impact

Employment BenefitEmployment Benefit

Hospital jobs benefit more than just their Hospital jobs benefit more than just their employeesemployees

Nationally, hospitals support one out of nine Nationally, hospitals support one out of nine jobs in US directly or indirectlyjobs in US directly or indirectly

Each of those hospital jobs supports about Each of those hospital jobs supports about two additional jobs two additional jobs

MT Employment BenefitMT Employment Benefit

Source: Research & Analysis Bureau, MT Department of Labor & Industry, QCEW program.

Continued employment benefitContinued employment benefit

Total Employment Impact of Montana’s Hospitals

Jobs from HospitalsHospital Employment 20,962Jobs created in other businesses 16,560

TOTAL JOBS 37,522

Source: Research & Analysis Bureau, MT Department of Labor & Industry, QCEW program.

Montana Hospitals EmploymentMontana Hospitals Employment Hospitals employ 20,962 people.Hospitals employ 20,962 people. Hospitals employ many professional staff. Most Hospitals employ many professional staff. Most

employees have college educations and advanced employees have college educations and advanced degrees. degrees.

The average hourly wage in Montana is between The average hourly wage in Montana is between $25 and $26 per hour. (Hospital wage index)$25 and $26 per hour. (Hospital wage index)

Many hospitals are one of the primary employers in Many hospitals are one of the primary employers in the community (generally second to school districts)the community (generally second to school districts)

In 2002, every hospital job in Montana created or In 2002, every hospital job in Montana created or supported 2.5 jobs in other businessessupported 2.5 jobs in other businesses11

“Impact of Community Hospitals on US Economy, All States and Total US Based on 2002 AHA Annual Survey Data TrendWatch. American Hospital Association. Vol. 6, No. 1. May 2004

Trickle Down EffectTrickle Down Effect

Buy LocallyBuy Locally– ConstructionConstruction– Linen processingLinen processing– Food servicesFood services– Banking servicesBanking services

Employee spendingEmployee spending– Grocery storeGrocery store– EntertainmentEntertainment– Retail storeRetail store

Added Economic Impact Added Economic Impact

Not-for-profit hospitalsNot-for-profit hospitals– Tax-exemption allows money to be put back into facility Tax-exemption allows money to be put back into facility

for continuation of servicesfor continuation of services– For profit subsidiaries pay state, local and federal taxesFor profit subsidiaries pay state, local and federal taxes

Statewide Hospital ExpendituresStatewide Hospital Expenditures– $1.5 billion in expenditures translates to $3.75 billion $1.5 billion in expenditures translates to $3.75 billion

effect on total state economyeffect on total state economy

EducationEducation

Going Beyond the ClassroomGoing Beyond the Classroom

Career days at local schoolsCareer days at local schools– Continue to build interest in health careContinue to build interest in health care

Majority of hospitals educate future health care Majority of hospitals educate future health care professionals professionals – MDs, RNs, Radiology Techs, Laboratory TechsMDs, RNs, Radiology Techs, Laboratory Techs

Those individuals often get hired by those facilities Those individuals often get hired by those facilities (thus creating more revenue for the community)(thus creating more revenue for the community)

Continuing Education/Education Continuing Education/Education FundingFunding

Tuition reimbursementTuition reimbursement

Continuing education classesContinuing education classes

On-the-job trainingOn-the-job training

SummarySummary

Montana hospitals strive to continually Montana hospitals strive to continually provide community benefitprovide community benefit– Unfunded careUnfunded care– Economic impactEconomic impact– Community ProgramsCommunity Programs– EducationEducation