Providers Awaken to Day One of Sequestration

Van Gorder says Scripps has been preparing for an era of flat or even reduced reimbursements, in whatever form they might take. At some point, he says, "even for Scripps and large healthcare systems like ours, we can reach a breaking point where we will have to look at programs and all aspects of care delivery."

"We are nearing that breaking point," he says. "I suspect that smaller and independent facilities have reached and are probably past the breaking point. If all of these cuts and reductions come to pass you will be seeing a significant increase in lay-offs of healthcare providers, program closures and organizations going into bankruptcy."

Van Gorder says he expects the effects of the cuts to be felt increasingly over the months and years. "We are already feeling the pressure from cuts in state and commercial reimbursement. Sequestration will hit us later this year and the planned cuts in DSH and additional Medicare in 2014," he said.

"So we are already feeling the pain and unless something changes, it will just grow over the next couple of years. But we are not standing still either. We are working every day to lower costs by reducing unnecessary variation and by building in system-wide efficiencies - while not forgetting quality along the way."