Hospitals that serve a large number of Medicaid patients suffer greatly when Medicaid payment rates are cut back, and hospitals in fact tend to reduce services or even close as a result of the cuts, according to a study published this month in the journal Health Services Research.
The service cutbacks primarily hurt Medicaid recipients, the authors say, because hospitals with heavy Medicaid patient loads lack the ability to cost-shift to private payers. So, they reduce the money-losing part of their operations, which serves Medicaid patients, they say.
Health Services Research is published by the Health Research and Educational Trust, an affiliate of the American Hospital Association. When fighting Medicare and Medicaid spending reductions on Capitol Hill, the AHA historically has argued that such curbs would force many hospitals to close or eliminate services.
The authors looked at private hospitals with high Medicaid caseloads in California between the years of 1983 and 1992. Payments for Medicaid were reduced dramatically during this period. The authors measured how much services declined at Medicaid-dependent institutions and whether prices were raised for private payers.
They found that prices did not go up for private payers; if anything, they went down. They attribute this to the growth of managed care in California during these years.
Hospitals with large Medicaid loads were more likely to close than other hospitals. Of the 374 hospitals included at the beginning of the study, 50 closed.
The authors project that if severe cutbacks in Medicare reimbursements are adopted by the federal government, "their burden will fall squarely on the shoulders of Medicare recipients and the hospitals that serve them." They predict that hospitals with a high proportion of elderly patients may be forced to close.
Meanwhile, a separate study released last week said homeless people put a substantial burden on public hospitals in New York City. The study, published in the New England Journal of Medicine, said homeless patients had an average length of stay 36% longer than other patients. That extra time in the hospital cost $2,414 per discharge for all causes. The longer stays were primarily due to the patients' lack of housing to return to after discharge.