How Medicaid Cuts Affect Summit Healthcare Regional Medical Center

  • Posted on: Apr 13 2015

As another legislative session comes to an end, we in the hospital and healthcare community are at a crossroads.

Hospitals like ours expect to once again endure budget cuts in the coming year, as State policymakers enacted another 5 percent reduction to what our facility is reimbursed for care provided to Medicaid recipients. This cut amounts to the loss of about $120 million for hospitals statewide, including close to $1 million here at Summit Healthcare Regional Medical Center.

As with other Arizona hospitals, Summit Healthcare’s management team has done everything in its power to identify internal efficiencies that will save money and not impact patient care. Unfortunately, there is only so much we can do on our end if the state continues down this path of continuous cuts to healthcare providers.

The financial impact of AHCCCS (Medicaid) budget cuts that began in 2008 and the impact of the AHCCCS cuts contained in the 2015 State Budget have a significant effect on Summit Healthcare. Currently AHCCCS represents 24% of Summit Healthcare’s business primarily because we serve as a safety net for providing Obstetrics services to the White Mountain communities. AHCCCS currently pays 19.5 cents for every dollar that we charge and the remaining balance is written off due to AHCCCS fee schedules.

To better understand our current financial situation, consider this: For every Medicaid patient receiving care, hospitals are only reimbursed 70% of the cost for treatment. The disparity has only grown in recent years – reimbursement rates currently paid by the State to hospitals for Medicaid care are actually down 10 percent from 2007 levels. Since the economic downturn began, combined State cuts to Medicaid payments and other hospital programs total more than $1 billion. The estimated reduction in AHCCCS payments to Summit Healthcare from 2008 to 2014 is $7,054,840.

This is simply unsustainable.

With this in mind, it should come as no surprise that nearly 1 in 3 Arizona hospitals are functioning at a loss. Also, overall operating margins continue to shrink, down a full percentage point since 2013. Some State policymakers have the false impression hospitals are flush with cash; I can assure you that is far from true.

To help balance the State Budget in 2015, the Legislature approved another 5% rate cut effective October 1, 2015, a 50% Disproportionate Share Hospital (DSH) cut and a hospital assessment increase. The annual financial impact of these changes to Summit Healthcare is $1.2 million.

Summit Healthcare has been a staple in the White Mountain communities since 1970. Providing quality patient care is our mission and top priority. It is time that we have a serious conversation about the future of Arizona’s hospital and healthcare system in order to ensure patients in every corner of our state have continued access to life-saving care.

On behalf of Summit Healthcare, we stand ready to play a role in this conversation – together with local and State policymakers, health providers and business leaders – as we discuss how to make our healthcare system stronger and more efficient with taxpayer dollars.

We owe our patients nothing less. Sincerely,

Ron McArthur, CEO
Summit Healthcare Regional Medical Center

About Summit Healthcare

Summit Healthcare is a not-for-profit health care organization with the primary mission to provide exceptional, compassionate care close to home. For further information, please call 928.537.4375 or visit our web site www.SummitHealthcare.net.

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