Hospital CEO: Decline in reimbursements linked to higher health premiums

By Danielle Thomas - bio | email

GULFPORT, MS (WLOX) - The head of Memorial Hospital says he'll wait to give an opinion on healthcare reform until after Americans decide what kind of change they want. However, Chief Executive Officer Gary Marchand had plenty to say at a Coast Chamber meeting Thursday morning about how shrinking government reimbursements are affecting the healthcare industry and what customers pay for insurance.

Every day, 24 hours a day, the nurses and doctors at Memorial Hospital in Gulfport treat their patients. Hospital executives say while the cost of providing care has gone up over the years, what the government pays has not.

"Since the early 1980s, major programs throughout the country have really focused on ramping down reimbursement to hospitals and physicians, really, in an effort to control cost of care," Marchand said. "After 30 years of those payment models, it's beginning to have some effect on the industry."

Marchand points to a report by the American Hospital Association showing that in 1999 the Medicare reimbursement was at 100 percent. Now, that's down to slightly more than 78 percent. Medicaid reimbursement has fallen from 98.1 percent to 89.6 percent.

Marchand said what the government pays to defray costs for treating the uninsured means a 20 percent loss for the hospital.

Marchand cited a report put out recently by the Urban Institute. It said that of the 45 million uninsured in this country, about 6 million are illegal immigrants, 20 million are childless adults in generally good health, and the other 16 million are parents and children.

Of the last group, Marchand said, "A fair number of them, I believe 20 to 25 percent, have access to some type of health care program, [but are] just not aware of it."

During a Coast Chamber meeting, an audience member asked how Memorial makes up the gap left by federal and state payments.

"Our view is always what do we need to keep the services available to this community," responded Marchand. "So we do shift some costs from those federal and state programs into the private premiums.  It's basically your private insurance premiums that reflect that cost being passed on."

"If we got paid our full cost by federal and state program, what could I lower your premium by? I could probably lower my prices to private industry by 20 maybe 30 percent. "

Because Memorial offers an array of healthcare, Marchand said Memorial has coped with reduced reimbursements better than other providers. Still the hospital is considering cutting some services.

"Nobody is paying us what it costs us to provide the care. Nobody. So it's sort of like well, how long can we go on doing this and stay in business?"

Marchand said staying in business is becoming more and more difficult for the country's hospitals.

According to the American Hospital Association the United State 6,888 hospitals in 1983 and has 5,708 now. There are half as many available beds as it did in 1983.

Memorial officials say the good news is that technology has reduced hospital stays because many surgeries can now be done as outpatient procedures.

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