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Hospitals, feeling a financial squeeze, look to keep patients healthier

Health systems say Medicare, Medicaid payments are falling far behind the cost of care.

Health systems say Medicare, Medicaid payments are falling

Health systems say Medicare, Medicaid payments are falling far behind the cost of care. Photo Credit: Getty Images/simonkr

An aging Long Island population that is making more and more use of Medicare and lower-income patients on Medicaid are placing a financial squeeze on hospitals. Payments from the government-run insurance programs do not come close to matching the cost of care, hospitals said.  

Although 35 percent of Americans are on Medicare or Medicaid, more than 60 percent of patients at Long Island area hospitals are Medicare or Medicaid subscribers, health systems said. 

The disparity is, in part, because the prevalence of chronic disease, such as heart and lung disease or diabetes, tends to be higher  among lower-income people and older people,  served respectively by Medicaid and Medicare, experts said.  

“The percentage of patients at our hospital who use Medicare or Medicaid has gone up over the last three years,” said Richard J. Murphy, president and CEO at South Nassau Communities Hospital in Oceanside, which is part of the Mount Sinai Health System. “Our region is getting older, and younger people have left. It’s very much a financial concern.” 

In response to the payment squeeze and to state and federal financial incentive programs that reward better patient outcomes, Mount Sinai and other health systems are investing in programs to keep patients healthier — and out of the hospital.  

On average, Medicare pays about 85 percent of a hospital’s cost to take care of a patient. Medicaid pays closer to 75 percent. Commercial insurers — who primarily provide employer-sponsored health insurance — often pay more than the cost of care itself, which helps  narrow the deficit in hospital expenses. Experts said commercial payments can vary widely because each health system negotiates private contracts with insurance carriers.

The pinch is being felt nationwide, where 5 percent of the population accounts for half of all health spending, according to the Kaiser Family Foundation, a nonprofit that focuses on health care policy. Care for individuals in this group costs an average of  $50,000 annually,  Kaiser said.

Nationally, Medicare and Medicaid accounted for more than 60 percent of all care provided by hospitals, according to the American Hospital Association, a Washington, D.C.-based group that advocates for hospitals. Payments from the two government programs were  $76.8 billion less than the cost of care in 2017, the association said.  

Hospitals provided another $38.4 billion in uncompensated care in 2017 for the uninsured or patients who didn't pay their portion of a bill, the AHA reported. Hospitals, by law, must provide emergency care to patients regardless of their ability to pay, officials said.

Long Island hospitals delivered $685 million in uncompensated care in 2015, the last year data was available, according to the Nassau-Suffolk Hospital Council, a Hauppauge-based trade group that advocates for  the Island’s hospitals.

“The pain is the same on Long Island as it is nationwide,” said Kevin Dahill, president and chief executive of the council. “For hospitals in certain areas, where Medicaid is an even higher percentage, the pain is far worse, and uncompensated care is an issue.”

New Hyde Park-based Northwell Health, which operates 23 hospitals including 13 on Long Island,  said it provided $248 million in uncompensated care in 2017, Stony Brook Medicine said $131 million and Catholic Health Services said $92.5 million.

Manhattan-based Mount Sinai said it had $150 million in uncompensated care in 2017.

“We are an $8 billion system, including our medical school,” said Dr. Kenneth L. Davis, president and CEO of Mount Sinai, which operates eight hospitals, including South Nassau Communities Hospital. “And if we get a 1 percent margin [roughly $80 million], we are lucky. So the $150 million isn’t insignificant.”

Health systems said that as not-for-profits, they expect a shrinking margin could eventually lead to less investment in research, reduced services, layoffs, or more pressure on fundraising to make up the difference. 

Manhattan-based NYU-Langone said it provided nearly $70 million in uncompensated care over the 12-month period ended Aug. 31, 2018.

A patient mix that's too heavily weighted toward Medicare and Medicaid means "you will have a very difficult time making ends meet,” said Dr. Andrew W. Brotman, senior vice president and vice dean for clinical affairs and strategy at NYU-Langone, which operates six hospitals in the New York region and is waiting for regulatory approval to take over NYU Winthrop Hospital in Mineola. “But that’s been the trend. We are close to 30 percent Medicaid and 40 percent Medicare, depending on our facility. The days of being paid predominantly by commercial insurance are gone.”

New York State has tied Medicaid payments to better patient outcomes through its Delivery System Reform Incentive Payment (DSRIP) program.  

The $8 billion program, phased in beginning in 2014, rewards health systems for investing in projects that focus on clinical improvements to keep patients healthy and out of the hospital, and especially to avoid costly visits to the emergency room.

In the early years of DSRIP, providers were rewarded for meeting milestones such as implementing behavioral health screening programs to identify patients with mental health or substance abuse issues. 

Increasingly, providers receive funding based on performance, such as reducing emergency room visits or improving patients' adherence to care instructions. 

Health systems will also be rewarded if they are able to lower the number of avoidable hospitalizations, which include being readmitted for chronic conditions, by 25 percent by March 2020.

The federal government has jurisdiction over Medicare, and it has also created incentives to keep patients out of the hospital, such as lowering payments to hospitals with too many readmissions. 

Health systems have invested millions in strategies to respond to the changing financial landscape. 

For example, Northwell Health late last year trained its first group of Suffolk County-based community health workers, who serve as Northwell liaisons with patients in medically underserved areas. Patients in those areas on average have lower life expectancy and other health disparities, Northwell said.

The community health workers, who went through a seven-week training program, moved into positions at Northwell or at a community service organization that partners with the health system. The workers connect with patients before and after appointments to make sure they have access to medicine, transportation to a doctor’s office and general health care support.

The community health workers also help patients obtain government benefits they didn’t realize were available to them, said Ducamel Denis, who went through the Northwell program and is now employed at a pediatrician's office in Islip.

Patients with better access to benefits generally get better care and are more likely to stay out of the hospital.

“There are SNAP [nutrition benefits], Social Security, Medicaid and all kinds of other benefits that I didn’t know were available to people until I went through the training program,” Denis said. “I become their advocate. I go to the various offices, help them fill out forms and work through everything for them, so they get the benefits.”

About 44 percent of Northwell’s hospital patients are on Medicare, while 21 percent use Medicaid.

Northwell said it has other programs that aim at social factors, including one initiative that helps provide access to nutritious food to people who can’t afford it or who lack transportation to get it.

The health system in 2017 opened crisis centers at Zucker Hillside Hospital in Glen Oaks, Queens, and Cohen Children’s Medical Center in New Hyde Park to treat adults and children with behavioral health issues who used to end up at emergency rooms, said Joseph Lamantia, Northwell’s vice president of population health and executive director of Northwell Health Solutions. He said about 4,300 people went through the crisis centers in 2018, and 90 percent of them were discharged and linked with mental health specialists in their community.

“They’d previously end up at the [emergency department],” Lamantia said.

Catholic Health Services, which operates six hospitals on Long Island, has hired nurses, dietitians and behavioral experts dedicated to keeping patients focused on their prescribed care, such as taking their medication. The care-coordination program leads to healthier and less expensive outcomes, CHS said.

“A small percentage of patients drive a disproportionate amount of spending, and they are the high-risk patients,” said Dr. George Beauregard, senior vice president and chief physician executive of CHS Physician Partners at Catholic Health Services. “Through the care-coordination program, we have identified who these patients are, what types of chronic conditions they have, how many trips to the ER they’ve made and how many times they’ve been admitted.”

He said about 2,000 patients have been identified as “high-risk,” and about 60 percent of them are actively participating in the program.

The care-coordination team includes 13 registered nurses and health coaches working from a central location in Garden City and another 15 registered nurses, licensed clinical social workers and licensed practical nurses who are usually based out of high-volume primary-care practices affiliated with Catholic Health Services. The health system is hiring pharmacists to join the group, Beauregard said.

 Rockville Centre-based CHS also provides preventive services through its Healthy Sundays program, which offers health screenings and education to people in underserved communities. CHS partners with more than 40 churches and community centers to provide the care.

Nearly 54 percent of patients at CHS hospitals are on Medicare, the health system said.

Stony Brook Medicine screens patients who enter its emergency department for alcohol, drug and tobacco use with a short questionnaire. The health system has helped people access substance abuse treatment programs because of the questionnaire, said Dr. Kristie Golden, an associate director at Stony Brook Medicine, which is coordinating the initiative available throughout Suffolk County. 

“They may be in the emergency room for another issue, but the underlying problem of substance abuse could be making their health worse,” she said. “When you do this, you’re moving toward a healthier population as a whole.”

It also reduces costs for the hospital, experts said.

Stony Brook also has programs to help high-risk patients with food and housing needs,   as well as transportation to and from doctor’s appointments.

Stony Brook said of its 38,000 annual admissions, about 40 percent of patients use Medicare, 20 percent use Medicaid and 4 percent are uninsured.

NYU-Langone is using care management strategies to connect high-risk patients to community resources, and telehealth technology — where patients connect with caregivers via laptop or smartphone — to provide greater access to behavioral health care.

Mount Sinai said it has a variety of coordinated-care efforts to keep patients out of the hospital and reduce costs. For instance, it operates a Hospitalization at Home program in which eligible patients are sent home from the emergency department to receive acute-care services from a team of physicians, nurse practitioners, and nurses in their own homes.

Mount Sinai continues to offer support services for 30 days post-discharge from the program.  

The conditions most frequently treated under this model are urinary tract infections, pneumonia, cellulitis (a bacterial skin infection) and congestive heart failure.

Results from a research study of the program demonstrated improved patient outcomes. The 30-day readmission rate was 8.6 percent for patients treated at home, compared with 15.6 percent for those admitted to the hospital. The 30-day emergency room revisit rate was 5.8 percent, compared with 11.7 percent for all patients.

South Nassau Communities Hospital said its improved care coordination has resulted in shorter hospital stays, better communication between patients and providers, and more collaboration among relevant departments within the hospital. The hospital added that the better results have led to lower care costs. For example, it has created a coordinated-care system tied to hip and knee replacement surgeries.

"This includes doing more of the rehab at home," said Murphy, at South Nassau.
 

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