WE’VE COME A LONG WAY …

Deaths due to heart attack cut in half Days spent in hospitals cut by 56% Increased life expectancy by 3.2 years ADVANCES IN THE LAST 20 YEARS

92 general acute care hospitals 58,000 births annually 641,000 inpatient stays and 1.8 billion outpatient visits CLOSER TO HOME

EVIDENCE OF GOOD CARE In the first year of the federal government’s pay for performance program, Alabama’s hospitals ranked number 1 in the country! Recently, in a CDC infection prevention study, Alabama’s hospitals, along with California, performed better than the nation.

MORE INFORMATION ON QUALITY

TREMENDOUS ECONOMIC IMPACT More than $19 billion in total economic impact or $3917 for every Alabamian!

HUGE SOURCE OF JOBS Alabama’s hospitals employ 84,000 people and indirectly support 86,000 jobs in other industries for a total of 171,000 jobs. Our hospitals provide approximately $4.5 billion in salaries and benefits for another $2.9 billion indirectly for a total of $7.4 billion.

HOSPITALS HAVE CUT COSTS Hospital care as a percent of national spending has declined from 43 percent in 1980 to 32 percent in Alabama has one of the lowest cost-per- discharge rates in the country. Alabama’s hospitals reduced blood stream infections by 53 percent in just two years, saving an estimated $4.8 million.

DESPITE THEIR BEST EFFORTS Alabama’s hospitals are struggling financially: 41 percent are operating with a negative margin. 60 percent have less than a five-percent margin Between 2011 and 2013, six community hospitals have closed.

AS A RESULT OF LOW MARGINS 57% are delaying purchases of new equipment and other capital expenditures. 43% report challenges renewing or renegotiating their bad debt 43% cut staff, and 46% cut services. 81% of rural hospitals saw an increase in bad debt and charity care.

HOW DO ALABAMA’S HOSPITALS GET PAID?

INEQUITABLE MEDICARE PAYMENTS Hospitals receive a fixed payment for each Medicare stay based on the diagnosis, thus placing the risk at the hospital level. Payments include a base payment adjusted by several factors, including wages. Hospitals in some states are paid twice as much as Alabama hospitals.

ReportingReporting VBPVBP ReadmissionsReadmissions HACsHACs Meaningful Use 1% 1.25%1.5%1.75%2% 1%2%3% 2% 1% 3% 2% 9% 1% Penalties affect the ‘base operating DRG amounts’ The amounts noted for ‘Reporting’ and ‘Meaningful Use’ are approximations; the actual percentages vary as a function of several factors

MEDICAID Currently provides coverage for half of all deliveries and 2/3 of nursing home care. 40% of Medicaid budget used to provide care to blind and disabled. Very strict eligibility – no childless adult covered, and a family of four must make less than $4300 a year to qualify.

MEDICAID FUNDING Out of $6 billion budget, only $671 million are state dollars. Alabama gets 68 cents in federal matching funds for every 32 cents of state funding. Not one dime of General Fund dollars are used for hospital care. Payments come from hospital assessments and transfers matched with federal dollars.

MEDICAID TRANSFORMATION Dramatic reform of Medicaid program will provide financial stability for state budget and encourage more coordinated care. Will place risk at community level. Hospitals have been integral part of reform effort, but face an uncertain future as success of reform will mean fewer hospital admissions.

NATIONAL TRANSFORMATION Affordable Care Act created opportunities and challenges. Greater coverage with premium subsidies, but challenges collecting higher copays. Payments to help hospitals cover the cost of treating the uninsured are decreasing (supposed to be balanced with Medicaid expansion, which hasn’t happened in Alabama).

OTHER GAME CHANGERS Constant audits: RACs – identify payment errors. MACs – conduct reviews for payment accuracy and medical necessity ZPICs – look for billing fraud CERTS – work with MACs and randomly review claims

OTHER GAME CHANGERS Difficult to know what to do: Strict admission criteria Observation – too sick to go home, but don’t meet criteria for admission Increase in observation – less money for hospitals, more out- of-pocket for patients Result – two-midnight rule

OTHER GAME CHANGERS Electronic health records: Pros – should increase efficiency and continuity of care Cons – expensive to implement, unrealistic goals Penalties for not meeting targets Security issues

NEED COMMUNITY SUPPORT Hospitals are only as strong as their local support. We need: Your ideas Your understanding Your patronage Your voice with lawmakers