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Federal Debt Commission Makes Unrealistic Recommendations

Karen Minich-Pourshadi, for HealthLeaders Media, November 15, 2010

The west Alabama Health System serves seven counties and has a varied payer mix across all four of its facilities, which include the 583-bed DCH Regional Medical Center, the 204-bed Northport Medical Center, the 61-bed Fayette Medical Center and the 56-bed Pickens County Medical Center.

Just based on the current reform act, Winfrey says he’s anticipating being paid $3.4 million less (2.4%) less in fiscal year 2015—and that’s providing that his volumes don’t change; which is an unlikely scenario.

“I’m very concerned that they are suggesting additional cuts to physician reimbursement on top of what may happen in December,” he says. “I was shocked [by these recommendations]; they are taking healthcare reform to a new level.”

While none of the proposed cuts are good for healthcare, some of them actually make very little sense, especially if the goal of the Administration is to actually improve the quality of care. While CMS will have to draw up some quality measures, frankly if the purpose of the DSH payment is to help fund hospitals that serve indigent patients, cutting money supporting this isn’t likely to provide much impetus for quality to improve.

Most facilities still need to at least cover the expense of the care so they can keep on providing it. And, with the number of physicians expected to decline in the coming years, why on earth would this committee recommend decreasing funds to educate more physicians. The cost of educating these providers can’t possibly save the government enough money that it will offset the human losses that will be incurred by having throngs of patients who can’t get in to see a physician when they need to.

“This country is going to see a major loss in older physicians who will hang it up earlier and possibly lose younger physicians as cuts are made on Graduate and Indirect Medical Education,” adds Winfrey.

There are a few recommendations that actually may prove helpful if they were to be approved. They include:

  • Required rebates for brand name drugs as a condition of participating in Medicare Part D.
  • Comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law.
  • Expansion of cost-sharing in Medicare to promote informed consumer health choices and spending.
  • Expansion of accountable care organizations, bundled payments and other payment reforms.
  • Reduction of federal spending on Medicaid administrative costs.

Unfortunately, while these other items could be positive steps toward helping healthcare, they will do very little to offset the financial cuts that would come along with the rest of the report’s recommendations if they are approved. The simple fact is, and that seems to be consistently lost on our government, is that while not-for-profit hospitals and health systems are not in business to make a profit, realistically they must make some profit in order to stay open and perform their mission to serve the uninsured and underinsured populations. If these kinds of payment cuts keep taking place, eventually one of two things will happen: those that can’t afford care will not be treated, or the hospitals will just go out of business. Either course won’t produce positive long term results for anyone.


Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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2 comments on "Federal Debt Commission Makes Unrealistic Recommendations"


tkerr (11/16/2010 at 1:51 PM)
Everybody wants to go to heaven and nobody wants to die! A larger problem than cutbacks in healthcare payments to providers is the looming finacial train wreck if we dont reduce our deficit. Every group that is targeted, defense, farming, healthcare etc. will scream but EVERYONE must take a hit if we are to restore sanity to our fiscal policy. Suck it up and do better with less is the new reality for all Americans.

rswift (11/15/2010 at 11:10 PM)
I think the commission co-chairs did a pretty good job with their recommendations. Unfortunately, everyone thinks that there is an area that cannot be cut - be it health care, defense or farm subsidies. The reality of our healthcare system is that we are spending more per capita than every other country and with lower outcomes, have nothing to show for it. I agree that the answer is not ONLY unit cost reductions, but instead it requires a fundemental change in how we finance and pay for care. None of us may like the fee cuts, but to date nothing else has forced us to change the way we pay for & deliver care.