In business, it's never a good idea to let your competition or your customers know you're struggling.
But when the American Hospital Association asked its members to go public about their struggles with the Medicare spending limits mandated by the Balanced Budget Act of 1997, tiny Schoolcraft Memorial Hospital stepped up to the plate.
"If we don't tell our story, everyone is going to think that everything is fine," said David Jahn, administrator of the 20-bed hospital in Manistique, Mich.
Schoolcraft Memorial is one of at least 15 hospitals that so far have been used in an AHA-led lobbying and advertising campaign to persuade lawmakers to undo the blow to hospital Medicare funding that the AHA blames on the balanced-budget law.
Most of the hospitals cited as victims of the law are small or rural facilities whose financial futures can hinge on slight changes in revenues.
Providers have claimed that almost $80 billion in unexpected Medicare savings now being projected between 1998 and 2002 are greater payment cuts than the law originally intended (April 12, p. 26).
Besides the AHA, others groups taking part in the lobbying-advertising campaign include the Federation of American Health Systems, which represents for-profit hospitals, and the Catholic Health Association.
The decision to be part of such a campaign isn't easy for hospitals, especially those in competitive markets, said Thomas Scully, the federation's president and chief executive officer.
"Admitting you are having problems to your employees and your community is a tough thing to do," he said.
As part of the campaign, short case studies about the hospitals' plights are being published in advertisements in newspapers and newsletters widely read on Capitol Hill. The AHA also ran an advertorial in the April 28 New York Times.
Another campaign tactic has been "blast faxing," in which each member of Congress is faxed copies of the hospital case studies. The case studies are titled "Real Pain for Real People."
The AHA said it so far has spent about $200,000 on the advertising campaign.
By detailing examples of service cuts at the nation's hospitals, the AHA is trying to show the local consequences of federal legislation, said Richard Pollack, the AHA's executive vice president and director of government and public affairs.
"From our perspective, we have to keep hammering home the fact that this has a human impact," Pollack said.
At Schoolcraft Memorial, officials said the county hospital has had to reduce the hours its rural health clinic is open. Further Medicare reductions could mean the elimination of the hospital's obstetrics unit, where 125 babies are delivered each year. If that happens, the nearest hospital is 55 miles away, Jahn said.
He said the balanced-budget law cost Schoolcraft Memorial about $500,000 in revenues last year. He said the hospital posted a net loss of $50,000 on total revenues of $8 million, even though the hospital's utilization was up 20%.
Fostoria (Ohio) Community Hospital, a 50-bed facility, is another one of the AHA's case studies. According to Fostoria, the hospital has suspended its program of putting nurses in local schools.
The balanced-budget law will cost the not-for-profit hospital about $1 million in revenues over five years, said Brad Higgins, Fostoria's president and CEO.
For the fiscal year ended Oct. 1, 1998, Fostoria posted net income of $440,000 on revenues of $22.5 million, Higgins said. After putting an austerity program in place, the hospital expects to finish the current fiscal year with net income of less than $300,000 on revenues of more than $24 million.
Higgins said he hopes something positive will come out of the public relations campaign.
"I don't know that it will change behavior on the Hill," Higgins said. "Hopefully, it will change voting behavior."