Washington Regional Medical Center in Fayetteville is among the latest of several Arkansas hospitals to announce layoffs. Officials say a drop in revenue stemming from health care changes and reimbursement reductions is to blame.
The Fayetteville hospital plans to cut 27 positions, according to officials. Some employees will be reassigned, but 15-20 will lose their jobs.
Positions at all levels were affected by the reduction, said Terry Fox, hospital spokesman. She said clinical staff members, such as nurses, have the opportunity for reassignment to other positions at the medical center.
An $8.75 million drop in revenue over the past two years has forced the hospital to make changes to ensure its future, Fox said. She said Washington Regional's annual operating budget is $260 million.
Reimbursement reductions from Medicare, Medicaid and commercial insurance have caused the revenue drop, Fox said.
Reductions in Medicare reimbursements in the past few years account for 30 percent of the revenue decrease, Fox said. She said a drop in commercial insurance coverage accounts for another 30 percent. Cuts from the Budget Control Act of 2011 make up another 25 percent and Medicaid 15 percent.
On June 26, CHI St. Vincent announced that it was cutting 157 positions. The health care system operates hospitals in Little Rock, Hot Springs, Sherwood and Morrilton.
Mercy announced last month that it was cutting 200 to 300 positions in its health care system that includes hospitals and clinics in Arkansas and six other states.
Reimbursement reductions from the government along with commercial payers were also mentioned among the reasons for the layoffs by Mercy, according to a news release from the system.
Paul Cunningham, Arkansas Hospital Association executive vice president, said hospitals across the state and nation are facing tough times financially.
"It all goes back to a big reduction in Medicare payments," Cunningham said. "It is easy to say that is all associated with the Affordable Care Act, but that is not the case."
About half of reimbursement reductions come from the Patient Protection and Affordable Care Act that was passed in 2010, Cunningham said. He said the other reductions stem from other acts passed in Congress since 2010, including the Middle Class Tax Relief Act, the Taxpayer Relief Act and the Budget Control Act.
Cunningham said hospitals planned for Medicaid reductions from the Affordable Care Act. He said hospitals hoped to make up for the drop in revenue with more patients insured.
"What hospitals did not plan for were the other cuts such as the Budget Control Act," Cunningham said.
The association projected that Arkansas hospitals will see $2.5 billion in reductions between 2013 and 2022, Cunningham said.
He said there is still a hope that an increase in the number of insured patients under the Affordable Care Act will help hospitals make up for reductions.
Fox said Washington Regional's decision to reduce staff took into account some of the "positive aspects" of the Affordable Care Act.
"Obviously the implementation [of the Affordable Care Act] has not gone as planned and has been slower than expected," Fox said.
Benefits from the Affordable Care Act, such as an increase in revenue because more people are insured, have not offset reimbursement cuts that Washington Regional has seen in recent years, Fox said.
University of Arkansas for Medical Sciences Medical Center officials said earlier this year that the hospital could face layoffs because of a projected $29 million deficit in its $1.3 billion budget for fiscal 2014. Fiscal 2014 ended Monday.
Roxane Townsend, medical center chief executive officer, previously stated that the hospital absorbed $63.7 million in uncompensated costs last year. Nearly $17 million was bad debt, and the other $46.7 million was charity care.
The hospital receives some reimbursement for charity care through Medicaid Disproportionate Share Hospital payments, Townsend said.
Townsend said Disproportionate Share Hospital payments cover nearly half of the cost of the hospital's charity care. That leaves the hospital paying about $23 million on top of the $17 million from bad debt.
The federal government plans to roll back Disproportionate Share Hospital payments as hospitals start to receive more money under the Affordable Care Act, Townsend said.
NW News on 07/04/2014