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Affordable Care Act affects hospitals

By Callan Gray, cgray@wcyb.com
Published On: Sep 14 2013 07:53:27 PM CDT
Updated On: Sep 12 2013 11:00:00 PM CDT

Local hospitals are struggling to financially deal with cuts made by the affordable care act.

Local hospitals are struggling to financially deal with cuts made by the Affordable Care Act.

Wellmont Health System decided to close the Lee Regional Medical Center Wednesday.

Denny DeNarvaez, CEO, Wellmont told us cuts in reimbursement fees for services made it hard to keep the hospital open.

The federal government pays for 60-65% of care given by Wellmont, said DeNarvaez.

In the case of Lee Hospital, it was closer to 85%, she said.

"State funding by far is the more significant immediate issue that could be expanded," said DeNarvaez. "There's quite a few folks particularly in the Northeast Tennessee region that would qualify under Medicaid expansion."

The federal government gave funds, through the Affordable Care Act, to the states for Medicaid expansion, she said.

Both Tennessee and Virginia state governments did not approve the expansion so the hospitals will not get the funds, which could offset the cuts in care reimbursements.

"In those states where Medicaid is going to be expanded, they had got what they believed they signed up for," said DeNarvaez, "Unfortunately for us, in both Tennessee and Virginia where we have our hospital and in the community we  serve neither state has decided to expand Medicaid"

The states' decisions not to approve the funding hit the Tri-Cities Region hard, said DeNarvaez.

"We have a situation where many of the cuts under the Affordable Care Act have gone into place and we have nothing to sub it for," she said.

The cuts come as part of a movement from fee-for-service based operations and towards value-based services.

"Somewhat of the challenge is that hospitals the old way have been about taking care of patients when they're sick and we're transitioning into a time when we need to keep them well," said Tony Benton, Vice President of communications, Mountain State Health Alliance.

Hospitals now pay a re-admittance fee, an effort to enforce quality care to patients during their first stay at any hospital.

"The health industry was already in the process of changing and decades of fee-for-service model where more procedures that are done, the more visits that are done, the more providers get paid is shifting to a fee-for-value system," said Benton.

The Affordable Care Act is a push towards that form of service.

The Affordable Care Act cuts are hitting hard right now because the industry is still transitioning, Benton and DeNarvaez agree.

"The problem is we have a foot on the dock and a foot in the boat right now and it's stretching us," described Denarvaez.

The Affordable Care Act forced Wellmont to streamline their operations, said DeNarvaez.

"There is no question that much of what Obamacare was designed to do, is again, to not have folks step off at one facility just to be transferred to another which is expensive," she said.

That's another one of the reasons, said Denarvaez, that they closed Lee Regional Medical Center.

Mountain States Health Alliance is dealing with the cuts by investing in their hospitals, said Benton.

They are spending money on technology to bring better physicians to their hospitals in order to bring in more patients instead of cutting staff, said Benton

"We are able to again continue to invest in technology," he said. "We are adding capacity and keeping up infrastructure that we have so we can continue to produce services."

They expect cuts to services and staff over the next 10 years, Benton and DeNarvaez told us.