How Medicare Advantage Cost Bristol Hospital Its Staff

The Connecticut-based operator cut 60 positions to offset the costs associated with Medicare Advantage delays and denials.

Repeated Medicare Advantage (MA) claim denials left one Connecticut hospital in financial peril, causing it to significantly cut down on staff.

Bristol Hospital CEO Kurt Barwis told the Hartford Courant that in an effort to save on costs stemming from lack of reimbursement from insurers, the operator will eliminate 60 jobs, 21 of which will result in layoffs.

The MA “abuse” is the latest instance of the private program causing problems for providers, with Barwis reporting that MA insurers continue to increase their rate of denials while further delaying payments that aren’t denied.

Bristol Hospital, which operates 154 beds and physician and lab networks in 20 locations, has 63% of its Medicare patients on MA plans, while 5 to 6% of the hospital’s budget goes to insurer administrative expenses, the Courant reported.

The hospital has been facing a financial crunch in recent years and reported a $12.8 million operating loss in fiscal 2023. By slashing 60 jobs, Barwis revealed that the organization will save $6.1 million.

“We went through an extensive process to find ways to make our processes more efficient and find any opportunity to reduce positions that wouldn’t affect patient care,” Barwis told the Courant. “We don’t have a choice. All the nice-to-haves are being taken out by the lack of insurance payment and the lack of reimbursement.”

MA specifically has been criticized for delays and denials, with recent data by Kodiak Solutions finding that the value of claims taking longer than 90 days to be paid has increased by over 40% for MA plans since 2020.

“Our primary care is to take care of patients, their single focus is shareholder value and profits,” Barwis told the Courant. “The Medicare Advantage abuse is outrageous.”

Turning to termination

Many hospitals and health systems are resorting to terminating their MA contracts to counteract the financial and administrative burden of the program.

Scripps Health is one of those organizations, with two medical groups within the system ending their MA contracts for 2024 due to low payments and denials.

Chris Van Goder, president and CEO of Scripps, told USA Today that after failing to negotiate more favorable reimbursement rates, the system decided to cut loose to alleviate their $75 million in annual losses.

That strategy isn’t a viable path for every hospital, but providers may have more options than they think.

“Providers are becoming more capable in measuring the impact of the slow or rejected payments, and providers are looking at the actual cost of care by patient,” Britt Berrett, managing director and teaching professor at Brigham Young University and former CEO with HCA, Texas Health Resources, and SHARP Healthcare, told HealthLeaders. “Payers need to be aware that.”