“Higher costs, lower payback squeezes hospital”

Whidbey General Hospital tries to find more places to cut costs following pressure from HMO.

  • Wednesday, October 11, 2000 8:00pm
  • News

“You don’t need to be a top diagnostician to figure out that the system of health care in this county is sick – all you need is your last health insurance payment stub. And that’s only if you’re lucky enough to have health insurance. About one of every 10 Washington residents don’t, and a much larger number have only basic coverage or are considered underinsured.But the health care problem under the current system of health maintenance organizations, or HMOs, doesn’t work very well for the health care providers or the health insurers, either. Whidbey General Hospital officials are currently in negotiations with Group Health Cooperative, one of the largest HMOs in the Northwest, which will eventually lead to the hospital continuing as a Group Health provider. Currently about 15 percent of the hospital’s patients use Group Health as their health insurance carrier. Back in late September, Group Health presented the hospital with a new contract proposal calling for what the hospital termed a significant reduction in what the HMO was willing to pay for services. Fearing the cuts were too deep to maintain good service, the hospital presented a counter proposal about a week later. This was followed by a revised proposal by Group Health. Now, said Doug Bishop, Whidbey General Hospital’s chief financial officer, the deal is back in the hospital’s hands. No matter which way the contract is finally drawn up, he said, the bottom line is that the hospital will be receiving less reimbursement for its services than it has in the past. The question now is simply how much less?They’re pushing us hard, Bishop told the hospital’s board of directors Monday night. They understand the climate for hospitals right now is tough, but it’s tough for them too. They want to know we’re still going to be a provider for them.A lot of the pressure comes from the fact that HMOs, particularly non-profit insurers such as Group Health, are trying to hold down the rising costs of health care for policy holders who are buckling under the weight of ever-increasing premiums. At the same time the HMOs are dealing with a federal Medicare funding system that currently comes nowhere close to covering the cost of that care. In addition, the current formula used to distribute Medicare money sends less to Washington than to many other states. For instance, some hospitals in Washington receive about half the money for the same services as hospitals in the state of New York. But Bishop said it doesn’t necessarily cost any less to operate a rural Washington hospital than it does to run a big city hospital – in fact, it often costs more. Medical equipment, for example, costs the same no matter where you are, but in non-urban areas such as Whidbey there is a smaller population base over which to spread the cost.The same goes for cost of high-quality medical staff and facilities.Whidbey General board member Barbara Saugen said the local hospital may not see as many emergency cases as a downtown Seattle hospital, but it must still provide and maintain full emergency room capabilities.Saugen added that the public is often unaware that a hospital such as Whidbey General only receives about half of the dollars patients see on their bills. She said the board and the hospital have been cutting back and reducing costs for some time but are starting to run out of places to tighten. Saugen represents Whidbey General in a new public information campaign produced by the Washington State Hospital Association. The campaign, called STAT! Washington Hospitals in Crisis, is designed to heighten awareness among legislators and the general public about the problems of health care funding.The STAT campaign has already gathered some disturbing stats of its own. Among them: more than one-third of the state’s hospitals operated in the red during 1998 and 1999; the lowest net hospital income in the last 40 years was recorded during 2000; and that area hospitals are having a hard time recruiting and retaining qualified nurses and other medical professionals because they cannot offer the same salary and benefits as other states. “

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