Results of AHCCCS cuts are troubling
Banner Health is facing challenges from decreased state and federal reimbursement, uncertainties in health care reform and a challenging economy. In addition, we have seen a rapid and significant increase in charity care and bad debt since the changes in health care reimbursement took effect.
In the Jan. 30 edition of the Arizona Republic in the Editorial Page section, Banner Health President and CEO Peter S. Fine wrote a column that reminds us that not only did Arizona's elected leaders cut the number of people covered by the Arizona Health Care Cost Containment System (AHCCCS); they cut AHCCCS reimbursement rates as well.
Peter S. Fine's editorial column in the Arizona Republic:
All too often there is a disproportionate amount of focus around the decision-making process on thorny political issues and very little focus on the actual consequences that become evident many months or even years after decisions are made.
Case in point: Nearly a year ago, our elected state leaders made decisions to decrease the number of people covered by the Arizona Health Care Cost Containment System and decrease the level of reimbursement to providers who care for people covered by AHCCCS. These decisions were made in the context of the state needing to make deep cuts to its budget to deal with a massive deficit.
In numerous public forums, including the editorial section of this newspaper, I and other Arizona health-care leaders painted a dire picture of the consequences of these decisions. We provided detail about the loss of access to quality care for people who desperately needed it; the financial burden that hospitals would bear, which then would be passed on to consumers through private insurers; and the high probability that providers would be forced to make difficult decisions about their respective services and workforces. Obviously, we did not prevail.
I believe we are now beginning to see the "early returns" from the AHCCCS decisions, which are very troubling to Banner Health as well as the state's health-care industry and overall economy. It is possible that the consequences of these AHCCCS decisions may have been underestimated.
During the fourth quarter of 2011, charity care in Arizona's Banner Health hospitals and by other providers -- that is care for people from whom there will be no reimbursement sought due to a lack of financial resources -- amounted to a jaw-dropping $103 million and an astounding increase of $52 million compared with the same time period in 2010, when it was $51 million.
Our bad debt -- that is people who have used our services but have chosen not to pay for their care -- was $74 million, a $31 million increase over the same time period in 2010, when it was $43 million.
Banner's combined charity and bad debt for our Arizona hospitals in the final quarter of 2011 was $177 million -- an increase of $83 million compared with the same time period in 2010.
Banner Health is a strong, viable organization that delivers high-quality care as noted by our recent recognition by Thomson Reuters as a top-5 health system in the nation for clinical care.
As Arizona's second-largest private employer, we will not be able to sustain losses of this magnitude through 2012 and 2013 without taking difficult actions that will result in a reduction of both employees and services to limit the impact of these losses.
While I am speaking for Banner Health, I can assure you other health-care organizations in the state are seeing this future similarly and are likely considering reduction options as well.
I find it ironic and extremely frustrating that the elected leaders who now are trying to publicly position themselves as "job creators" are the same leaders who made decisions affecting the AHCCCS program that have resulted in a significant, negative impact on hospitals.
Arizona's hospitals are an economic engine of high-paying, highly skilled jobs. Hospitals helped sustain this state through the most challenging times of the economic downturn.
Arizona gains nothing from efforts to create new jobs when outstanding jobs are lost in the hospital sector, which is where we are headed if our elected leaders don't act.
Hopefully, there will be new discussions during the legislative session that seek solutions that will help hospitals continue their role of being strong, reliable contributors to our state's economy. Such discussions could lead to innovative solutions, like the provider assessment, that are supportive of all Arizona hospitals and the patients they serve.
The provider-assessment proposal was recommended by Arizona hospitals a year ago and, with all due respect, has not been seriously considered by the legislature or governor's office. Therefore, we implore our elected leaders to assist us in solving this vexing problem.