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HomeTown Health - Ga Health Care Fall Industry Update 2010

HomeTown Health - Ga Health Care Fall Industry Update 2010. Current Georgia Rural Hospital Scenario. HomeTown Health - Ga Health Care Fall Industry Update 2010. Basis for HomeTown Health Observations Approximately 50 hospital visits since May 1, 2010

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HomeTown Health - Ga Health Care Fall Industry Update 2010

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  1. HomeTown Health - Ga Health Care Fall Industry Update 2010 Current Georgia Rural Hospital Scenario

  2. HomeTown Health - Ga Health Care Fall Industry Update 2010 Basis for HomeTown Health Observations Approximately 50 hospital visits since May 1, 2010 Four 2 day Budget Writer Visits to rural hospitals Recent 2-3 Dinner with Senator Goggans, Rep Channell, Lunch w Sen. Tommie Williams Two national conferences Study Forecast with Dr Carolyn Bordeaux SBO

  3. HomeTown Health - Ga Health Care Fall Industry Update 2010 19 Hospitals currently in consolidation or major financial distress, i.e. major cuts

  4. HomeTown Health - Ga Health Care Fall Industry Update 2010 Self Pay Higher Insurance Premiums driving industry from providing health care Obamacare has caused insurance premium increase for small business to be at least 15% up to 35% Higher deductibles Higher- Co-pays Essentially have created a class of insured self pays Consequence Rural Ga Hospital Net Revenues down 5%-15% since Jan1 2010

  5. HomeTown Health - Ga Health Care Fall Industry Update 2010 Payor Mix has amplified Self Pay to an overwhelming component of net revenue Next slide illustrates

  6. Wow! To 18% HomeTown Health - Ga Health Care Fall Industry Update 2010 Major Issue

  7. HomeTown Health - Ga Health Care Fall Industry Update 2010 Rural PPS Hospitals in Georgia – Status?

  8. HomeTown Health - Ga Health Care Fall Industry Update 2010 Positives for Stand Alone Rural PPS Hospitals Virtually No operational positives except best administrators in the industry Medicaid Rate Increase designed to offset Provider Tax – 1st Medicaid Rate Increase since 1998

  9. HomeTown Health - Ga Health Care Fall Industry Update 2010 Negatives for Rural PPS Hospitals Very poor Payor Mix 85.6% of cost paid for Medicaid In counties of highest unemployment Cannot support specialties like surgery due to demographics Encumbered by cost to charge ratio Major subsidy dependent Demographics do not support surgeons or specialist except on part time basis thus insufficient Commercial

  10. HomeTown Health - Ga Health Care Fall Industry Update 2010 Current Threats Provider Tax-Medicaid Rate Increase disparity from 2008 baseline Provider tax could be reopened leading to an expanded provider tax and loss of CAH exemption, especially if model revisions are used to reopen the subject Days Cash below 10 days Can’t recruit physicians Macs /Racs Bank covenant violation State Computer Conversion – ACS to HP Medicaid expansion to + 33 million Simply run out of cash Loss of UPL and dilution of Private DSH Gubernatorial Transition – no state budget experience

  11. HomeTown Health - Ga Health Care Fall Industry Update 2010 The Issues - What Are They?

  12. HomeTown Health - Ga Health Care Fall Industry Update 2010 Issues Budget $2 billion more to cut in 2012 Half billion more to cut in 2011 Revenues down this year as much as 15%-20% Unemployment still over 10% in most rural areas Self Pay soaring to 15%-20%

  13. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA 2012 State Budget Implications $21.0 Billion $17.5 Billion Cut another $2 billion 2012 Possibly to $15 billion

  14. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • 2012 State Budget Implications • Rural Health Care Access Loss – No OB, 32 of 34 CAH’s • No OB in 5 PPS plus 4more to drop • Virtually no surgery in rural hospitals • Up to 17 rural hospitals can close or reconfigure in 2012 – 4 PPS and 13 CAH • Major Program elimination • Current Instructions from OPB – 4%,6%,8% cuts 2011 • Headline – Cooperative Extension Scaling Back • 24% budget in 2 years • Eliminated 80 extension agents

  15. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • 2012 State Budget Implications • Make the case • Budget = 85% Education, Corrections, Medicaid • Medicaid Stimulus stipulation says cannot cut eligibility thus only rates which are already at 85.6% of cost. • Can we take $2 billion out of Corrections and Education? No so everything else goes!!!??

  16. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • 2012 State Budget Implications • There is no health care unity! Silos • 2) There will be agency and program pickoff’s/closures • 3) There is no statewide health care mission nor strategy • 4) New Governor will have overwhelming budget issues to override individual health care programs needs • 5) There is a 2012 $140 million FMAP shortfall due to Congressional underfunding

  17. Ga Health Ga Health Care Industry Update 2010Care Industry Update 2010 Health Care Silos Urban Hospitals FQHC’s Public Health Nursing Homes AHEC’S CSB’s Rural Hospitals

  18. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • Four largest Rural Health Care Issues • State Budget Shortfall through 2016 per SBO • 2) Profit differential between urban and rural hospitals • a) Rural health care gets painted with urban high profit brush • 3) Loss of rural presence in legislature • a) 2 or more senators lost due to census • b) 4-6 state representatives lost due to census • c) 20 or more legislators retiring or getting beat in Nov 2010 • 4) Georgia Physician Shortage • 300 shortage to date • 300 shortage more as a result of Health Care Reform

  19. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • The Future of Georgia’s Rural Health Care

  20. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • The Future of Rural Health Care • Rural Hospital Closures • Regionalization • Consolidation of programs • Accountable Care Organizations – ACO’s • 5000 Medicaid covered lives • Telemedicine • Health Care Reform • $500 billion cut in Medicare • $500 billion penalties and fraud recovery

  21. HomeTown Health - Ga Health Care Fall Industry Update 2010 • The Future of Rural Health Care 1 of 6 • Rural Hospital Closures • 5-10 rural hospitals can close in next two years • Will destroy 5-10 economic engines • Will destroy immediate access to health care to 100,000 Georgia citizens • FQHC’s compete with rural hospitals for volume until hospital closes then FQHC has to re-engineer itself with no local acute care referral station. Federal funded FQHC trumps locally/state funded delivery systems until they fall then FQHC’s have major problems. $10 million annually to state from Feds. • Example McRae Hospital closed last year

  22. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • The Future of Rural Health Care 2 of 6 • Regionalization • It takes 40,000 population to support a hospital and 33% commercial • It takes general surgery and Orthopedics • Local hospitals have to either consolidate or collaborate resources • Example – Ty Cobb closing two hospitals to make one

  23. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • The Future of Rural Health Care 3 of 6 • Consolidation of programs • Public Health will consolidate with duplicate agencies • Territorial silos have to be torn down to eliminate duplicative services • Example- • If every district does something different and state says standardize and eliminate non-core work • Orthopedics in Southeast Georgia – Tattnall, Jenkins, Screven, Jesup

  24. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • The Future of Rural Health Care 4 of 6 • Accountable Care Organizations – ACO’s • 5000 Medicaid covered lives • They are ill-defined but mandated in the health care reform package • Will result in capitation type organizations which will require new collaborations

  25. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • The Future of Rural Health Care 5 of 6 • Telemedicine • This is the new glue • Two new grants • $2.5 million for program expansion • $1 million over 3 years for national telemedicine extension center • Currently 170 sites with 40,000 consults • Will add 67 sites immediately due to new grant • Hospitals, nursing homes, CSB’s, Corrections, Public Health, school nurses, trauma, stroke, • Will evolve to in-home on-line delivery of health care via telemedicine – on line consults

  26. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • The Future of Rural Health Care 6 of 6 • Health Care Reform • $500 billion cut in Medicare • $500 billion penalties and fraud recovery • The State Medicaid program will take the brunt of cuts • Cuts will translate to local unfunded mandates and loss of local subsidy • Major expansion of Medicaid while ICTF and UPL go away and EMTALA, “prudent lay person” language, and “meaningful use” language will dictate

  27. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA And then there is the provider tax will it be reopened?

  28. HomeTown Health - Ga Health Care Fall Industry Update 2010 GRHA • Politics

  29. Urban takeover of legislature HomeTown Health - Ga Health Care Fall Industry UHomeTown Health - HomeTown Health - Ga Health Care Fall Industry Update 2010pdate 2010 This election may tip the balance of power away from old sources ANALYSIS Posted: August 2, 2010 - 12:19am  |  Updated: August 2, 2010 - 3:19am By Walter C. Jones ATLANTA - The makeup of the ballot shows how unusual this election is and provides evidence of how much Georgia is changing. For one thing, it's already clear that South Georgia has lost much of its influence. The remaining candidates for U.S. Senate and governor are all from above the Gnat Line. Veteran politicians from below the line saw their careers and hopes sputter as the primary returns were counted July 20, including Democrats Dubose Porter and David Poythress from Middle Georgia and Republicans Eric Johnson and Jeff Chapman from the Coast. Another South Georgia giant fell in the Democratic primary for labor commissioner, former House Speaker Terry Coleman of Eastman to metro Atlantan Darryl Hicks, at least unless a challenge changes the decision. The only candidates from below the Fall Line remaining on the statewide ballot are Democrats Ken Hodges of Albany, the nominee for attorney general, and J.B. Powell of Blythe near Augusta, the nominee for agriculture commissioner.

  30. Fmap loss Carter: Budget math hard to figure This new math is killing me! Seriously, how can 4.7 percent and 12.7 percent average out to be 1.3 percent? When it comes to the state of Georgia's budget, that's what a lot of financial gurus are saying actually has happened during the first two months of this fiscal year. In July of this year, revenues were up 4.7 percent from a year ago and in August they were up 12.7 percent from the same time last year. So that means that revenues are up 8.6 percent from where they were for the same two months last year, right? Not necessarily. After all, if we look closely at the numbers much of the gain in revenue this year is due to fewer individual income tax refunds being issued by the state than last year. Many will remember that overdue income tax refunds were processed and paid out in July and August of '09 and subtracted from that month's total tax collections. This year the state was timely in paying out the refunds in May and June. Couple this with the number and amount of tax refunds are down this year and the number comparisons are understandably inaccurate. Nevertheless, there is reason for celebration and optimism, albeit guarded. August marked the fourth month in a row for growth in tax collections after 17 straight months of declines. So, if we are trending in a positive manner and revenues are increasing, why has the governor ordered all state agencies except the Department of Education to brace for a 4 percent cut in this year's budget and prepare for up to a 10 percent cut next year? Remember is that the current fiscal year 2011 budget has a revenue growth of 5.09 percent built into it and if the actual growth thus far has only been 1.3 percent then we need to be prepared for a shortfall. The next few months should give us a clearer picture. Another reason is that Gov. Sonny Perdue is being conservative so that the next governor won't immediately have to order more cuts. But the overriding factor in the 4 percent cut is to cover the shortfall of $140 million in the federal Medicaid assistance funding percentages (FMAP) that Congress failed to approve late last month. Medicaid is the government's health insurance program for the poor that is primarily funded by federal matching funds drawn down with state dollars. It is the fastest growing entitlement program in government, as states have expanded eligibility and benefits. Unlike other states, Georgia has been fiscally responsible in managing Medicaid. We spend $6,000 per person in poverty on Medicaid. New York spends $18,000 per person. Only 18 percent of Georgians are on Medicaid as opposed to 26 percent in New York. Unfortunately, federal funding allows states that spend more on Medicaid to receive more matching funds, leaving states like Georgia holding the bag. For instance, while Georgia will receive about $240 million in FMAP from this latest approval, New York will receive $2.4 billion. The 10 percent budget cut preparation that Perdue has ordered for FY '12 is in anticipation of a $1.8 to $2 billion shortfall that is expected due to slow revenue growth as well as the loss of federal one-time stimulus funds. State Sen. Buddy Carter, R-Pooler, represents portions of C

  31. HomeTown Health - Ga Health Care HomeTown Health - Ga Health Care Fall Industry Update 2010 Georgia Legislative Changeover Coming 30+ new Representatives Nov 2010 16 new Senators Nov 2010 Pending Census Change Up to 8 Rural Representatives lost Up to 3-4 rural Senators Lost Loss of institutional knowledge

  32. HomeTown Health - Ga Health Care Fall Industry Update 2010Health - Ga Health Care Georgia Legislative Medicaid Politics Rep Mickey Channell Senator Greg Goggans

  33. HomeTown Health - Ga Health Care Fall Industry Update 2010 So what to do?

  34. HomeTown Health - Ga Health Care Fall Industry Update 2010 • Adhering strictly to proven operations benchmarks • Performance Benchmarking • $103,000/FTE • SWB <43% • Supplies % Net Rev <10% • Bad Debt % Net Revenue <8-10% • CAH >30% Net Revenue Commercial-Self Pay <12% Net Revenue • PPS >33% Net Revenue Commercial – Self Pay <12% Net Revenue • Baby deliveries must exceed 350 annually otherwise drop due to Medicaid pull along loss • 46,000 population required or if out migration can be controlled population required can drop to about 30,000 but not likely

  35. HomeTown Health - Ga Health Care Fall Industry Update 2010 • Adhering strictly to proven operations benchmarks • 4 C’s of survival for Georgia’s Rural Hospitals • Control – operations benchmarks • Capture Out Migration – with docs • Consolidate to achieve 40,000 demographic or mothership • Close

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