In the midst of the push to get in line with health reform, Massachusetts hospitals are experiencing great financial difficulty. Part of the requirement of the reworked method of administering care involves providing less of it, and rapid changes occurring in the health care market have contributed to major losses. 24 hospitals in the state lost substantial amounts of money last year, including academic medical centers, rural community hospitals, and urban safety net hospitals.
Boston Medical Center lost $25.1 million, Steward St. Elizabeth’s Medical Center had a deficit of $20.9 million, and Quincy Medical Center lost $18.5 million. With an overall performance decrease, the profit margins for hospitals in Massachusetts fell to 2.1 percent in 2011, down from 2.6 in 2010. Additional cuts are underway for Medicaid and Medicare, which leaves the future of these facilities in question.
The state passed a cost-control law this summer, and paired with the federal health law, hospitals are being forced to move toward coordinated care with little time to plan. Payment models that reward providers for keeping patients healthy as opposed to using costly treatment methods is also being heavily imposed. With such huge structural changes, it is necessary to have a strategy to move forward and remain in tact.
While striving to meet government quality and budget standards, hospitals across the state are trying to rework their current systems in order to receive the state’s approval. Several of these facilities risk being closed, which is why some small hospitals have already begun to merge with nearby affiliates or larger systems.
The financial losses and declining profits are coming at a horrible time, as these hospitals are being required to invest in new electronic medical records, information systems, and new medical programs to establish coordinated care. Losses are a result of different scenarios for each facility. Building a new facility cost Dana-Farber Cancer Institute in Boston some of their annual losses, while other hospitals experienced the effect of the economy causing patients to avoid elective surgery as they were concerned that they may lose their job.
Many hospitals are experiencing losses from the pressure of the government and commercial health plans to lower spending by performing less imaging tests and reducing the population of emergency rooms. However, under traditional fee-for-service contracts with insurers, hospitals are not being rewarded for eliminating care.
“We’re caught in that awkward time when we’re telling everybody to restructure and transform, but the payment systems are lagging,” said Nancy Kane, management professor and associate dean for educational programs at the Harvard School of Public Health.
Hospitals throughout the state are basically trying to find where they fit into the grand scheme of Massachusetts health reform. If a facility does not find its place, such as community health care, or join another hospital system, they will risk their future and potentially close.