KANSAS CITY, Mo.—The future of Truman Medical Centers, a two-hospital safety-net system here, depends on the state legislature—and no one understands that better than its new chief executive, Charlie Shields.
Mr. Shields, a genial 55-year-old, spent 20 years as a Republican lawmaker, ending up as the leader of the Missouri Senate before term limits forced him to step down. In 2010, he became chief operating officer of one of Truman’s hospitals, and in July he succeeded longtime Truman CEO John W. Bluford III.
Now Mr. Shields, whose office décor includes a collection of elephant statues, must press the legislature’s current Republican leaders to accept the Affordable Care Act’s expansion of Medicaid, the federal-state insurance for low-income people. Expanded Medicaid would be a financial lifeline for Truman, which is losing money as it cares for a large population of uninsured patients.
Mr. Shields said he tells lawmakers he understands their situation: “I’ve been in your shoes. I’ve made these tough decisions.” Indeed, he voted for a major retrenchment of Missouri’s Medicaid program in 2005, when about 100,000 people were cut from the rolls. He said the move was difficult but necessary amid a budget crunch, and that he always aimed for it to be reversed when there was funding to do so.
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Today, Mr. Shields argues, with federal money available because of the health law, the expansion makes sense. Under the law, the U.S. is supposed to pay the full cost of Medicaid expansion through 2016, and then a share that will phase down to 90% in 2020 and beyond.
Still, he acknowledged the political challenge for Republicans who don’t want to be seen as endorsing a law that is unpopular with many constituents. In polling performed by the Kaiser Family Foundation between January and October of this year, 34% of Missouri residents favored the law, while 52% viewed it unfavorably.
As a middle ground, Mr. Shields said, lawmakers could craft a “Missouri-specific solution” that could potentially occur under a federal waiver, and “there are a lot of things that would work” as a structure for expanding coverage.
The stakes couldn’t be higher for Truman, which plunged even deeper than expected into the red, at least on paper, soon after Mr. Shields took over.
Truman had been projecting an operating loss for its fiscal year ended June 30. But delay in an expected payment, and changing rules surrounding some earlier government funding that could eventually have to be repaid, forced Truman to book a far larger operating loss than it expected for fiscal 2014.
Underlying the hospitals’ financial problems, Mr. Shields said, is a systemic dilemma shown in a graph he has been displaying to policy makers and business leaders. It highlights the gap between Truman’s cost of caring for people without insurance and government funding the hospital gets to cover it—nearly $30 million in fiscal 2014, according to Truman. One of his slides notes that Truman currently has just one day of cash on hand. The gap is “not sustainable over time,” Mr. Shields said.
The health law could exacerbate the problem. Under the measure, federal payments to hospitals like Truman that provide a lot of unpaid care are supposed to be cut substantially, though Congress delayed the timing until 2017. Truman projects its reduction could amount to $22 million in 2017, growing to $34 million in 2018.
Mr. Shields said he is working to reduce costs, partly by leaving open jobs unfilled and offering voluntary job buyouts. But without the Medicaid expansion or other new funding, he might have to look at major cutbacks in areas such as behavioral health. Truman handles much of the city’s care for uninsured people with mental illnesses, through inpatient rooms and outpatient clinics.
“A bunch of that becomes at risk” if the law’s 2017 cuts take effect without a countervailing influx of newly covered Medicaid patients, he said. “At that point this would be a very different institution.”
Truman is one of many hospitals that may be caught in such a bind. A recent study in the journal Health Affairs found 377 hospitals that relied heavily on the uncompensated-care payments and were located in states that haven’t accepted the health law’s Medicaid expansion. Many were already in weak financial condition, the study said.
Expanded Medicaid would change the equation, Mr. Shields said—eliminating much of Truman’s uninsured population, who would gain new coverage, and putting it on far stronger financial footing.
The prospects for the expansion, opposed by many Republicans, are unclear. In an interview, Rep. Keith Frederick, a physician who has headed the Missouri House of Representatives’ Health Care Policy Committee, said he wants to see major changes to the state’s Medicaid program, and is concerned about the cost of an expansion, even if it is paid for with federal dollars. “There are a lot of reasons not to expand,” he said.
For his part, Mr. Shields, who works in a building named after his predecessor Mr. Bluford, said, “you have to be a little bit of an optimist in this business.” He enjoys making rounds of patient rooms, which reminds him of door-to-door campaigning, he said. But, he added, “you think about the finances all the time when you’re in this position…You know that if you don’t get it right and you don’t fix it…in the end the community will suffer.”
Date: November 11, 2014