Mercy officials not happy with healthcare law

A lengthy portion of a community roundtable held Thursday night (Oct. 10) by Mercy Hospital Fort Smith was probably uncomfortable for any attendees who are supporters of the federal healthcare law.

Lynn Britton, president and CEO of St. Louis-based Mercy, said the law now being more fully implemented is “challenging beyond anything I could have imagined,” and comes with many “unintended consequences.”

Britton’s commentary was followed by Mike McCurry, chief operating officer for the entire Mercy system, who said the original premise of how the law was to be funded is “extremely flawed.”

Britton, McCurry and Ryan Gehrig, president of Mercy Fort Smith, and Dr. Cole Goodman, president of Mercy Clinic in Fort Smith, spoke Thursday night (Oct. 10) to a crowd of 125 about the hospital’s efforts to expand facilities, services and add doctors in the Fort Smith region.

Prior to the comments about the impact of the federal healthcare law, Gehrig announced that Mercy will enter into a management agreement with the Booneville Community Hospital. Management will begin Nov. 1, with the hospital fully integrated into Mercy on Jan. 1.

‘PERVERSE INCENTIVES’
Two examples of the flawed funding for federal changes in the healthcare system are the “perverse incentives” in insurance for younger Americans, and for businesses with more than 50 full-time employees, McCurry said.

He said a young, single and healthy American male or female who rejects buying insurance is fined only $96 the first year, with the fines rising to an eventual cap of $650 – well below the cost of insurance.

“The incentive there is to not buy health insurance,” McCurry said.

According to McCurry, the average cost to provide benefits per employee in the U.S. is $11,000. The Kaiser Family Foundation reported in August that the average annual premiums for employer-sponsored health plans were $5,884 for single coverage and $16,351 for family coverage.

The healthcare law sets a $2,000 per employee fine for companies with 50 or more employees that do not provide health insurance. McMurry said the numbers show that businesses who have for years provided insurance now have an incentive to not provide insurance.

“The thing I did not expect from the bigger companies was that they would reduce their benefit structures, but that’s what has happened,” McCurry said.

‘HOSPITALS ARE ALARMED’
McCurry noted that initially it was thought hospitals would benefit from the new law because it would pay hospitals for some of the care provided for which the hospitals are never paid.

According to McCurry, just the opposite is happening. The health care exchanges established around the country are reimbursing hospitals and clinics at or slightly above Medicaid rates. The problem with that is hospitals are already losing money for services provided that are reimbursed at Medicaid rates, he said.

“Hospitals are alarmed about this, and they should be,” he said.

If in 2013 all care for Mercy patients was paid at exchange rates, McCurry said Mercy officials estimate at least $400 million in lost revenue. That would be unsustainable. The hospital system reported net operating income of $122.413 million in 2012, and estimates $105 million in 2013.

McCurry said the hospital system expects to lose about $48.5 million in 2013 revenue from the healthcare law and some from sequester cuts. When the law is fully implemented, McCurry said the Mercy network could annually lose $104.8 million in revenue.

Expected losses are, according to McCurry, why the Cleveland Clinic recently announced a plan to reduce employment by 3,000 jobs in an effort to cut costs by $850 million.

The American Hospital Association says about $95 billion in Medicaid cuts Congress approved separate from the healthcare law also contributed to Cleveland Clinic problem, and will also hurt other hospitals.

REACTING TO THE CHANGES
McCurry said hospitals officials have geared up to seek revenue from other sources to avoid the path the Cleveland Clinic has taken. Over the next five years, Mercy hopes to add up to $745 million in new revenue across the system. Potential sources for the new revenue include up to $600 million from virtual care and telemedicine initiatives, and $50 million in commercializing the system’s lab facilities.

In an interview after his audience comments, McCurry said Mercy is lobbying elected and appointed officials in Washington to make changes, but said it often feels like they are a “voice in the wilderness.”

He said the hospital has “long believed that health care reform was necessary,” but does not believe the new system is the best answer.

He did acknowledge that the American Hospital Association endorsed Obamacare and continues to support it, but added that the AHA action “wasn’t a popular decision among all members.”

REGIONAL PROGRESS REPORT
Before comments by Britton and McCurry, Goodman outlined several “promises kept” based on commitments made by Mercy officials beginning with the first community roundtable in 2010.

Officials with the St. Louis-based Sisters of Mercy announced in August 2011 a plan to invest about $192 million in Mercy facilities in the Fort Smith region as part of a 10-year plan to invest $4.8 billion in its operations in Arkansas, Kansas, Missouri and Oklahoma.

One of the promises kept is bringing in new physicians to address what continues to be a physician shortage in the Fort Smith area. Goodman said 30 doctors have been recruited to the area in the past year. The clinic now has 104 “primary care, specialty and hospital-based” doctors and 19 “advanced practice providers.” The clinic also has 278 non-physician employees.

Goodman said physician recruitment is not just about bringing doctors to Fort Smith. He said the clinic is negotiating to recruit a doctor to Booneville and a doctor to Ozark.

Goodman also announced that Mercy will build another primary care facility located across Cliff Drive from the Arkansas Best Corporate headquarters building. Construction is set to begin later this year, with the care center set to open in the summer of 2014.

Other highlighted improvements, additions and plans included:
• $10 million Mercy Heart and Vascular Center that opened in February 2013;

• A new Women’s Breast Center in the Mercy Medical Building set to open in December 2013;

• A new $4.5 million linear accelerator in the Hembree Cancer Center that allows radiation oncologists to more precisely target tumors;

• Opening of an orthopedic outreach clinic in Clarksville (Johnson County) and a cardiology outreach clinic in Stilwell, Okla.;

• New CT scanners in Mercy facilities in Waldron and Paris; and,

• A new school-based clinic in the Mansfield Public School District, with similar clinics set to open soon in Cedarville and Waldron schools.