For Brooklyn hospitals, it's all about the payer mix

Why aren't Brooklyn hospitals like Manhattan ones? Payer mix makes all the difference.

A recent joint legislative hearing on Brooklyn's hospital crisis triggered an analysis of the revenue streams of hospitals in the borough. Some politicians—Assemblyman Vito Lopez the most vocal among them—questioned the existence of a Brooklyn rate or a Manhattan rate.

As pointed out by Stephen Berger, the former chairman of the Medicaid Redesign Team's Brooklyn Task Force, the key issue is not whether Manhattan hospitals command higher rates—it is the dismal payer mix of Brooklyn's community hospitals. Most have very little commercial business to offset cuts in Medicaid or Medicare. Insurers who cater to large employer groups can't do without New York-Presbyterian, or Mount Sinai, in their networks, said Mr. Berger. That gives the Manhattan hospitals more leverage than Brooklyn hospitals in negotiating rates.

Safety-net hospitals should get enhanced Medicaid rates, the politicians agreed. Another suggestion for improving their revenue is to push for a more equitable distribution of funds from the state's charity care pool. Claudia Caine, Lutheran Medical Center's executive vice president and chief operating officer, suggested that safety-net providers should not just serve a high Medicaid population, but also have few commercial contracts. She suggested that no more than 25% of a hospital's payer mix be commercially insured for it to be eligible for charity care.

"This change would impact upon a relatively small number of hospitals statewide, but these are exactly the institutions that need special help to maintain viability," she said. "Ignoring this will lead to disaster in Brooklyn and ultimately elsewhere."