The leader of Wichita, Kan.-based Via Christi Health says the system will have to make significant cutbacks due to decreases in reimbursement from Medicare, Medicaid and private insurers.
The system plans to renew its lobbying of state lawmakers to expand Medicaid in hopes of sustaining its future.
Via Christi has absorbed over $25 million in annual reimbursement cuts from government and private payers since 2013, writes Jeff Korsmo, president and CEO of Via Christi Health, in a memo obtained by Modern Healthcare. The state's failure to expand KanCare Medicaid has left the system with $14 million in lost revenue every year and over $28 million over the past two years, he wrote.
“Our financial pressures have been intensified because of the refusal of Gov. Sam Brownback and the Kansas State Legislature to approve expanding the KanCare Medicaid insurance program for the poor and vulnerable,” Korsmo wrote.
The system has already cut over 110 full-time-equivalent employees over the past 18 months but still fell $3.3 million short of its budget for income from recurring operations through the first two months of the year. It's now looking at reductions in management roles and suspending some capital expenditures, while it halts discretionary spending for education, meetings and other similar expenses.
“While difficult, these cost-reductions are necessary,” Korsmo wrote. “Financial challenges in healthcare are intensifying, so we must constantly be focused on controlling costs while also seeking opportunities for growth.”
In addition to the decline in reimbursement, Korsmo writes that Via Christi has also experienced an increase in the number of patients who don't have insurance and are unable to pay their bills, which compounds their financial difficulties. The system's experience is similar to what has been reported in other states that haven't expanded Medicaid, where uninsured rates remain high and uncompensated care is still a notable expense.
The lack of Medicaid expansion has already been blamed for the October closure of Mercy Hospital Independence, a part of St. Louis-based Mercy health system. The hospital lost an estimated $1.6 million in annual revenue due to the lack of Medicaid expansion, according to Kansas Hospital Association estimates.
The KHA has estimated (PDF) that, beginning in 2016, Kansas hospitals will lose an estimated $131.9 million without Medicaid expansion. Officials estimate that it would result in $1.2 billion in statewide uncompensated care, which is 50% higher than the amount it would have incurred with expansion.
Hoping to prevent further damage to its budget, Via Christi is joining a coalition of several Kansas health systems and advocates that will push for expansion of the state's KanCare Medicaid program. But expansion will only partially offset the effects of years of reductions, according to Korsmo.
The coalition, which includes the Wichita-based Kansas Health Foundation; Wesley Medical Center in Wichita; the University of Kansas Hospital and St. Luke's Health System in Kansas City; and the Topeka-based Kansas Hospital Association, will hold an educational meeting for lawmakers on Nov. 3 in Wichita.
The meeting will include presentations from Indiana state officials. Korsmo notes that the Hoosier state is a “Republican-controlled state like Kansas that has found the political will and courage to expand Medicaid to improve access to healthcare for the poor while also strengthening the state economy and preserving healthcare jobs.”
Gov. Brownback and other opponents argue that expansion will likely cost the state too much money in the long run. Brownback told the Daily Signal, a publication backed by the conservative Heritage Foundation, that he doesn't believe the federal government is going to honor its commitment to pay 100% of expansion costs in the first three years of expansion and at least 90% after that.
“Do you think that a fiscally solid, prudent state like the state of Kansas is going to end up with a 90/10 ratio on Medicaid when the federal government is staring at that much cost? They're going to up our percentage,” Brownback said in 2014.
Moving forward, Via Christi will focus on hiring workers for clinical roles that are critical to patient safety, with a focus on hospital and ambulatory units with the greatest need, according to Korsmo. It'll also redeploy clinical staff working in low-volume areas to locations with more patients, and the system is looking at opportunities to divest or consolidate its nonclinical and real estate assets.
“We remain optimistic about our future,” Korsmo wrote to health system staff. “While this is a difficult period, Via Christi is blessed with a strong team of committed caregivers. We remain confident in our ability to continue to serve as the region's best choice to receive safe, high-quality care, helping those we serve heal both physically—and spiritually.”
