President Barack Obama listens intently at the health reform summit at Blair House, Thursday, February 25, 2010. AP Photo / Pablo Martinez Mosivais
Jackson Memorial Hospital in Miami, Florida, is one of the largest and most enduring city hospitals in the U.S. Since 1918, it has provided top-notch health care services to south Floridians, and has been a key teaching partner with the University of Miami’s medical school. In recent months, the hospital system revealed what first looked like a $50 million shortfall, which after further analysis, inexplicably grew to one of over $200 million.
The financial mosh-pit facing Jackson stands as a stark snapshot of what could happen to hospitals all over the nationif health reform fails, and begs the question: How long until hospitals public and private get smart, band together, and ask the Obama administration for a bail out?
Once upon a time in America, banks were ‘too big to fail’ and gave us the false sense of security that they could protect our money, be there for us when we needed them, and work with us when times got tough. The national economic rupture that took place in October, 2008 proved otherwise: the unthinkable happened, and vaunted names in the banking and insurance industries had to turn to Tio Sam for hundreds of billions of dollars in rescue funds.
This is no henny-penny-the-sky-is-falling projection of progressive paranoia: consider, Bank of America-Johns Hopkins, Merrill Lynch-Jackson Health, Citibank-Washington Mutual, AIG-The Cleveland Clinic. Granted, there is no linkage but the point is clear: names of institutions that once gave American’s supreme comfort in knowing that they would always be there for us in banking are now similarly fair game for a similar fate in health care.
According to the American Hospital Association and a Thomson-Reuters report from 2008, at the time 50% of all hospitals were insolvent. Their profit margins were at 0%, and their uncollected receivables were rising beyond comprehension. Miraculously, one year later, despite the tanking of the U.S. economy, hospitals were able to reduce the insolvency number from 50%, to only 20%, without benefit of an economic recovery.
Many of these gains were achieved through job cuts, reduction of hourly pay, and insensitively sending surgical patients home early instead of letting them set about their recovery for a couple days in the hospital, post-procedure. That is all well and good, but the remedy has now been exhausted, and the cancer that is the economy is showing little to no sign of creating jobs.
The why-and-wherefore’s of the partisan bickering on health care reform are too well known and too detailed to reprise here. However, the example of Jackson Memorial Hospital’s financial plight resonate because every major city in America has a legacy hospital like Jackson, and the health system is asking the state of Florida for $50 million to put towards its debt. Money the state doesn’t have.
Thus, a perfect storm is brewing while health care reform of ANY type is terminally bogged down. As a result, billions that would be going into reform to hopefully drive down costs and fund the uninsured will one day be tapped to bail out big city hospitals all over the country. Here’s why:
- As Anthem health care just showed in California, insurance companies are asking for double-digit premium increases---39% for the year for Wellpoint---money that comes out of an employees health plan, and in the case of the unemployed, money on top of money that they simply can’t pay.
- These premium increases will lead many employees covered by group plans to ‘dumb-down’ their coverage, settling for protection with higher deductibles for a narrower buffet of coverage choices. This leads to higher bills for the insured that can then turn into slow remittances to doctors and hospitals.
END PART I
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