Public Education Effort Explains the Importance of Virginia’s Hospitals, and the Financial Challenges that Threaten Access to Care and Local Economies
The Virginia Hospital & Healthcare Association is embarking on a statewide public awareness campaign to alert Virginians to the financial challenges confronting Virginia hospitals, and to explain how those pressures pose consequences for our economy and access to high-quality health care.
Virginians are fortunate to have a network of more than 100 hospitals around the state open night and day, year-round to care for anyone in need of medical attention – including those who can’t afford to pay. That commitment to care is part of hospitals’ mission. The cumulative effect of uncompensated care on hospitals is costly. So is the impact of declining Medicare and Medicaid reimbursement payments, which pay providers pennies on the dollar for treatment delivered. Additional stress on hospitals takes the form of provider cuts from the Affordable Care Act and sequestration. In 2013, Virginia hospitals provided $1.5 billion in community benefit reflecting charity care, financial assistance, Medicaid shortfall, and other factors. Combined with funding cuts and mandates, this is an unsustainable model.
Hospital leaders and other health care providers are speaking publicly about these issues to inform the public about what’s at stake: namely jobs, our economy, and ready access to high-quality health care. Their message will be delivered through a statewide public awareness effort that includes television, radio, digital, print, outdoor, and transit advertising. The Virginia Hospitals: Our Lifeline campaign publicly explains how challenging financial circumstances not of hospitals’ making jeopardize access to critical care when people most need it, and how those conditions also threaten local economies through potential impacts on employment and investment opportunities.
“Virginia’s hospitals are the lifeline of our patients, their families, and our communities,” said James B. Cole, President of Virginia Hospital Center in Arlington and Chairman of VHHA’s Board of Directors. “Across the spectrum, people agree that Virginia hospitals and health systems serve the public good and are there in times of need. The unfortunate reality is current conditions are squeezing health care providers. The combined effect of government mandates and other regulatory burdens leaves hospitals financially vulnerable. Hospitals stand ready to work with lawmakers on solutions to these challenges. We urge Virginians to learn more about these issues at www.ISupportVirginiaHospitals.com.”
Health care sector jobs have been an economic bright spot as one of the few Virginia employment growth categories in 2014. However, that trend may not endure if the financial squeeze on hospitals isn’t addressed.
Hospitals directly employ 115,000 people in good-paying jobs, with a combined payroll of roughly $8 billion.
Data show Virginia hospitals and health systems accounted for $36 billion in economic activity for the Commonwealth in 2013 (equivalent to nearly 86 percent of the state’s $42 billion budget that year).
Health care’s positive impact in rural Virginia is especially pronounced – health care is a top employer in 82 percent of rural Virginia counties.
Yet hospitals across the Commonwealth face financial stress. One-third of Virginia’s acute care hospitals had negative operating margins in 2013. In rural Virginia, 17 of 37 acute care hospitals operated in the red that year.
Hospitals and health systems have adapted to the challenges confronting them while also modernizing operational processes and updating how health care is provided to patients. Belt-tightening efficiencies, service consolidation, and even mergers are among the strategies hospitals and health systems have employed. None of those mechanisms can fully offset factors beyond hospitals’ control, such as:
On average, 60 percent of hospital patients are subsidized by Medicaid or Medicare programs which reimburse providers at rates below the true cost of care.
Some patients are unable to pay for the care provided to them by hospitals. Virginia hospitals in 2013 provided $627 million in free or discounted care, a 57 percent increase since 2008.
“As a not-for-profit health system, Bon Secours is familiar with the challenges health care providers are faced with today,” said Toni R. Ardabell, Chief Executive Officer, Bon Secours Richmond Health System. “Virginia hospitals and health systems are in an unprecedented period of transition as we adjust new performance and care-delivery models, and shift from a fee-for-service approach to a value-based one. These changes, however, come at a tremendous expense that must be absorbed by individual systems and hospitals. Still, we remain dedicated to the health and well-being of the communities we serve, and work continuously to provide care of the highest quality, a testament to the standard of care in Virginia.”
“Augusta Health is one of the few remaining independent hospitals functioning in Virginia,” said Mary N. Mannix, President and CEO of Augusta Health in Fishersville and Vice Chair of VHHA’s Board of Directors. “The trend in our industry is toward consolidation and mergers, one reflection of the challenges independent hospitals face. The distressing fact is that Virginia hospitals, whether independent or health system-aligned, are grappling with decisions about providing the best care in a regulatory and statutory climate inhospitable to health care provider stability both in Virginia and nationally. In the Commonwealth, this situation could cause harm to our economic prospects – businesses don’t want to relocate or expand in communities without strong health care infrastructure. Good health care and a vibrant economy are intertwined.”
The public education and outreach campaign formally launching today will be visible across Virginia, from rural communities to bustling cities and suburbs. Through its sustained public outreach campaign, VHHA encourages all Virginians to learn what is at stake for our communities, our economy, and public well-being. VHHA and its members stand ready to work with the public and elected representatives to achieve policy outcomes that protect the health care economy which benefits Virginia with good jobs and positive economic contributions, and public access to vital health care services.