Law change will cost hospital millions

But Obamacare will eliminate loss in future, CEO says

Only a few days after the United State Supreme Court upheld the Affordable Care Act, commonly known as Obamacare, funding that would reimburse Louisiana’s charity and rural hospitals for uncompensated care was stripped from a transportation bill that passed through Congress.

The stripped funding would have provided for $650 million in Hurricane Katrina-related relief funds that would have gone towards reimbursing local hospitals for treating those who do not have insurance. For St. Charles Parish Hospital, that amounts to $6 million, or roughly 15 percent, of the hospital’s budget for this year. Hospital CEO Federico Martinez said reimbursement for uncompensated care has been as high as $10 million in some years.

Martinez said that while in the future the Affordable Care Act will virtually eliminate uncompensated care, this year may be a big problem.

"Certainly I advocate for healthcare," Martinez said. "I like good roads just as much as anybody else, but there is going to be a point where providers can’t handle cuts anymore."

Martinez said if the funding is not reinstated he knows some rural hospitals will have to shut down completely, and St. Charles Parish Hospital will have to find a way to make up for the lost funds.

"We would have to start making cuts," Martinez said. "We wouldn’t be able to handle that for the whole year and not receive any of that money."

Martinez said the hospital had already started undergoing some cost-saving measures before the announcement.

"We’re pulling out of the retirement system that we are in because it is a really expensive retirement system, but there was a two-year notice period that was required, so we gave the retirement system notice a little over a year ago," Martinez said. "We will actually pull out of the retirement system in June of 2013."

Martinez said changing retirement plans will save the hospital $1 million per year alone starting next year, but it is a long way from bridging the $6 million gap this year. He said one thing the hospital cannot cut is treatment for those without insurance.

"We have a lot of issues we have to deal with because of the fact so many people don’t have insurance," Martinez said. "As a hospital we are legally bound and ethically bound to, I believe, take care of people when they walk in that door. So you can’t just turn them away."

Martinez said once the Affordable Care Act is fully instated in 2014, paying for everyone’s treatment will no longer be a problem.

"Under Obamacare, hopefully everybody gets paid and we will be able to coordinate care a lot easier–so that is how it is going to impact the providers," Martinez said. "It is a better payment system from what I can see. Now obviously it costs the country more for this system we are moving to."

Subsequently, Martinez said higher insurance costs will have an impact on the hospital due to the insurance they offer their own employees.

"As hospital employer, we have about two thirds who aren’t covered by health insurance because they can’t afford it. Even though we provide it and share in the cost of the plan," Martinez said. "We have a high percentage of females that are employed for us so some of them are covered under their husband’s plans, but a lot of our lower paid employees choose not to get it because they can’t afford it."

Martinez said despite the higher costs he thinks the changes will do a lot to progress the future of medicine.

"If you think of Medicare and Medicaid when they were first started, a lot of people thought that would ruin what modern medicine was at the time, but it actually fueled a tremendous technology advancement in medicine and it certainly helped a lot of people through the years–the elderly and the poor," Martinez said. "It has helped a lot people throughout the years receive medical care. I think the Affordable Care Act will do something similar."

In the meantime Martinez said he will be looking toward the Louisiana Rural Health Association to help advocate to restore the cuts in uncompensated care.