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Pa. hospital loses $915,000 because of Medicare cuts

October 12, 2000

Pa. hospital loses $915,000 because of Medicare cuts



By RICHARD F. BELISLE / Staff Writer, Waynesboro


WAYNESBORO, Pa. - Cuts in Medicare reimbursements brought about by the 1997 federal Balanced Budget Act cost Waynesboro Hospital more than $900,000 in the fiscal year ending June 30, the hospital's controller said Thursday.

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The loss, reported to the hospital's board of directors at their annual meeting earlier this week, will not cause increased fees to patients or employee layoffs, said Controller Jeff Carty.

The $915,000 loss showed up in the operating expenses side of the hospital's balance sheet.

Cuts in federal Medicare reimbursements to the hospital plus an increased cost of pharmaceuticals contributed to the shortfall, Carty said.

All hospitals are feeling the same pinch, according to the Hospital and Healthsystem Association of Pennsylvania. Less than one in five hospitals in Pennsylvania are able to cover operating expenses with patient revenues and 70 percent reported decreases in net income because of Medicare cuts forced by the Balanced Budget Act.

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More than half of Waynesboro Hospital's patients are covered by Medicare, Carty said. Altogether, more than 85 percent of its in-patients are covered by fixed-payer providers, all of which pay a flat amount for treatments and care, an amount that doesn't always pay the actual cost.

Waynesboro Hospital's bad debts for the year, racked up from patients without insurance or those who failed to pay the amount not covered by their insurance, came to more than $1.4 million, Carty said.

The hospital has a contract with Blue Cross in which the insurer pays about $4,000 for each incident, whether the actual cost to the hospital is as little as $100 or, in the case of one recent patient who had a long hospital stay, more than $150,000, Carty said. About 20 percent of Waynesboro's patients are covered by Blue Cross, he said.

"People should know that the hospital doesn't always get paid for everything it charges," Carty said.

He said the feds were supposed to cut only $58 billion from Medicare to balance the budget. Instead they cut $70 billion. "It's too much," he said.

Norman Epstein, president and chief executive officer of Summit Health in Chambersburg, Pa., which owns Waynesboro and Chambersburg hospitals, said in his annual report to the Waynesboro Hospital Board of Directors this week that a major lobbying effort is under way by a consortium of health care systems, suppliers, hospital associations and the U.S. Chamber of Commerce to get Congress and the president to reverse some of the effects of the Balanced Budget Act and restore some of the cuts to hospitals treating Medicare patients.

Sheran White, Summit Health spokeswoman, said Thursday the question of whether Chambersburg Hospital will also suffer a loss because of Medicare reimbursements won't be known until the audit of its annual report is completed.

In his remarks to the board, Epstein said the shortage of nurses that affects the country as a whole also affects staffing at Waynesboro Hospital. He said it is more difficult to recruit and retain nurses. "The average age of a nurse in the country today is 42," he said. "Fewer people are going into nursing at a time when there is more demand because of an increasing aging population and variety of health care options."

He also said more women are entering medical schools. Nearly half of the students today are women.

"We are working with the significant restraints of budget to find ways to make sure our staff is well-compensated, receive appropriate benefits and see Waynesboro as the right place to work," Epstein said in his remarks to the board.

The makeup of the hospital's board of directors changed this week with the exit of two long-time members - Joann Hersh who served for nine years, including the last two as chairman, and Paul Dunlap, who also served three, three-year terms.

New board members appointed were David Goldenberg, chief executive officer of Penn State Mont Alto, attorney Lynn Y. McBride and Allison B. Kohler, a retired Waynesboro school teacher.

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