How Debt Ceiling Shenanigans Could Damage Healthcare

Cheryl Clark, August 11, 2011

You remember the Greek myth about Scylla and Charybdis, the sea monsters who wreak havoc on ships along the Strait of Messina, the treacherous path that separates Sicily from mainland Italy?

These days, I'm hearing that cliché in discussions about the debt ceiling debacle, and its potentially horrific impact on healthcare. These monsters represent the threats healthcare executives are worrying about in their journey across the quality chasm.

One of the monsters – say Charybdis – is the whirlpool of reimbursement cuts these hospital chiefs can see clearly ahead – the 6% or $155 billion from Medicare reimbursement over the next 10 years they agreed to for healthcare reform. Hospitals and health systems are stuck with that one, and are preparing for it, or they should be by cutting excess and standardizing for quality.

Then there is Scylla, the six-headed sea monster, so far unclear and unknown, but who looks even more fierce and more real as the political debate becomes more shrill with each passing summer day. The two of them form an evil specter that awaits along that passage. 

Do you deal with the devil you know and hope the one you don't goes away? Or do you wait to see how it all falls out in a few years and grapple with them both then?

An e-mail this week from Chris Van Gorder, president and CEO of Scripps Health in San Diego and Immediate Past Chairman of the American College of Healthcare Executives – who talks with a lot of folks who run hospitals around the country – explains the lurking threat:

"The debt ceiling challenge for our country has created a new and unexpected challenge for us," he wrote.

"Since Congress and the President could not resolve the debt ceiling issue, they came up with a temporary fix. Congress lifted the debt ceiling temporarily and decided to appoint a 12-member 'super committee,' charged with coming up with a plan to cut $1.5 trillion from the federal budget over 10 years."

"Here's the catch," he wrote. "If this super-committee can't come up with a plan by Nov. 23, a back-up plan or 'trigger' automatically kicks in" slicing another 2% from Medicare starting in 2013 in a process called "sequestration."

Van Gorder says that's another $50 billion per year less to hospitals and $11 billion per year less to physicians.

The so called super committee, is also known as the “Dirty Dozen” because many dread the task it must take on. It  will likely impose greater cuts than Van Gorder is maneuvering to grapple with. And, he says, the cuts are likely to come sooner than expected.

"In a worst case, hospitals could close, or close some services and some physicians might decide they could no longer take care of Medicare patients," he wrote.

Van Gorder 's warning is scary. He did not even mention the other financial whirlpools in this precarious channel. These include, the additional penalties federal payers will impose for hospitals:

  • That score lower on quality metrics such as patient experience
  • That rank in the high quartile in readmission rates
  • That have poorer speed of care in the emergency department
  • With higher rates of hospital acquired conditions


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