August 2015 Edition Explores how Government Mandates Financially Stress Virginia Hospitals, Threatening the Economy, and Public Health

August 26, 2015

RICHMOND, VA – VHHA is relaunching its venerable publication FOCUS with a redesigned look as part of the Association’s ongoing public outreach and communication efforts. The publication, which will be issued monthly, has been in circulation for decades.

The article in the August edition of FOCUS explores the financial challenges facing Virginia hospitals and health systems as a result of systemic factors such as growing charity care, declining Medicare and Medicaid reimbursements, and federal funding cuts. (The latest edition is available online here, and hard copies are being mailed throughout Virginia this week.) Even as health care providers face these external financial pressures, they must simultaneously meet costly new government-imposed obligations to convert to electronic medical records, develop more integrated care models, and make other significant operational changes.

“Achieving our mission of making Virginia the healthiest state in the nation will take collaboration among stakeholders including health care providers, business leaders, the public, and the government. Charting a path to a healthier Virginia also requires clear communication with affected parties so everyone understands the issues, the challenges and the opportunities,” said VHHA President and CEO Sean Connaughton. “The stakes are clear in Virginia: hospitals and health systems face an array of financially destabilizing public policies that, if unaddressed, will impede the public’s access to quality, affordable health care and negatively impact communities across the Commonwealth. Breathing new life into our legacy FOCUS publication is among the many ways our Association will educate the public and policymakers about the important health care issues of the day.”

Beyond the expense of implementing new care and patient-focused protocols, the stability of Virginia hospitals and health systems is jeopardized by the smothering statutory and regulatory regime that exists. If left unaddressed, the current environment could result in serious job losses, elimination of specialty services, and shuttered facilities, all of which would reduce the public’s access to vital medical care treatment options. Economically, those avoidable outcomes could financially hobble Virginia. The combined effect of letting hospitals languish without relief from the present conditions would be devastating for countless Virginians who rely on health care providers in their time of need. For perspective, consider that Virginia hospitals had nearly 3.6 million emergency room visits in 2013, and that more than 100,000 babies were delivered that year in VHHA member facilities.

Highlights of August’s FOCUS edition include:

• Hospitals are a major employer in the Commonwealth directly responsible for 115,000 good-paying jobs with a combined payroll of nearly $8 billion. Hospitals generated roughly $36 billion in economic activity for Virginia in 2013.
• Health care jobs were one of the few employment growth sectors in the Commonwealth last year – 1 in 9 jobs (11 percent of Virginia’s workforce) are in the industry.
• Total health care-related jobs are an even larger slice of the economy. According to the Virginia Labor Market Index, direct and indirect health care-related jobs account for almost 950,000 of all Virginia jobs (approximately 23 percent of the workforce).
• Virginia’s health systems are in the midst of an unprecedented transition. The metamorphosis is organizational and operational. It covers everything from the health care delivery model, to major investments for health information technology, clinical integration models to improve care coordination, protocol changes to achieve better health outcomes, and work to enhance value for those we serve. Unfortunately, this forward momentum is imperiled by political inertia producing status quo policies – namely a failure to find a pragmatic path forward on enabling more Virginians to access affordable health care and pay for health services rendered.
• Affordable Care Act-related cuts to Virginia’s Medicare providers will grow to more than $675 million by federal fiscal year 2021.
• At present, 74 percent of patients at Virginia’s rural hospitals and 60 percent at urban hospitals receive health coverage through Medicare or Medicaid, meaning hospitals receive pennies on the dollar for care provided to a majority of patients. And reimbursement rates for those programs are on a steady decline.
• On average, 6 percent of patients do not pay their hospital charges. Last year, Virginia hospitals provided $627 million in free or discounted care, up 57 percent since 2008.
• A financial forecast model developed in late 2014 projects that all Virginia hospital operating margins will decline. The challenge is even more acute for Virginia’s rural hospitals – their operating margins are forecast to reach zero percent by 2022.

About VHHA: The Virginia Hospital & Healthcare Association is an alliance of 107 hospitals and 30 health delivery systems that develops and advocates for sound health care policy in the Commonwealth. Its vision is to achieve excellence in both health care and health.