Hospital report warns Medicaid cuts could be costly to economy

State Medicaid cuts could cost the state up to $800 million annually, a report released this week by the Louisiana Hospital Association said.
Additionally, if state-matching Medicaid funds were cut, each parish could stand to lose 127 jobs, according to the report by James A. Richardson, alumni professor of economics at Louisiana State University.
Richardson was hired to provide an analysis of the economic impact of the hospital industry on the Louisiana economy and metropolitan areas within the state.
“Hospitals and the Louisiana Economy, 2014” states Medicaid-related hospital expenditures create and support over 48,000 jobs and generate over $137.5 million of state tax collections and $117.8 million of local tax collections.
According to Teche Regional Medical Center CEO Butch Frazier, “It is important for the public to understand that Medicaid cuts not only have an impact on hospitals, but also on the communities that those hospitals serve.”
Teche Regional’s charity and other uncompensated care, which includes the unpaid cost of Medicaid, totaled $3.3 million in 2013, according to the hospital’s Community Benefit Report.
Richardson said that because of the federal match, the impact of the state reducing its direct expenditures for Medicaid by $150 million would be a loss of an additional $245 million of federal dollars for an overall reduction of $395 million in state funds; a loss of about 8,144 jobs statewide; and a reduction in personal earnings of $329 million. This would lead to a reduction in overall business transactions of $800 million.
In Louisiana, for every 38 cents the state spends on the Medicaid program, it receives approximately 62 cents from the federal government, the report states.
Paul Salles, Louisiana Hospital Association president and CEO, said, “Year after year, hospitals face state budget cuts that not only negatively impact direct hospital jobs and patient services, but also our state’s overall economy.”
Across the state, hospitals generate more than $29.9 billion annually in economic activity and directly employ more than 98,000 people, according to the report.
Locally, Teche Regional’s impact, according to its self-generated Community Benefit Report for 2013, was $4.6 million generated from charity and other uncompensated care; financial contributions, professional development and physician recruitment; and taxes paid.
Frazier said, “These dollars help to maintain local schools, fund road developments, and recruit new businesses to the area.”
According to the report, the health care sector in Louisiana employs 285,950 Louisiana residents with a payroll of more than $10.9 billion. Hospitals provide jobs for 98,224 people with an annual payroll of more than $4.62 billion, accounting for approximately 35 percent of the total employees and 42.2 percent of the total health care sector payroll.
Teche Regional’s portion of that was $18.5 million paid to 314 employees, according to the hospital’s report.
Salles said, “Over the past few years, the business community and the public have really begun to understand how hospitals are intrinsically linked to the state’s economy. Our hospitals not only provide vital, life-saving services, but they also strengthen a community by providing well-paid, highly-skilled jobs.”
Richardson explained the “economic benefits of the hospital industry expand far beyond the doors of the hospitals and the people directly employed by these facilities.” From 2012 to 2013, Louisiana hospitals averaged about $870 million in building construction, leading to the creation of more than 14,000 new jobs yearly in sectors other than health care.
Teche Regional made $1.4 million in facility improvements in 2013 which included technology replacement and facility upkeep and maintenance, according to the hospital’s report.
The LHA document also includes a series of responses from its annual survey of hospitals about the effects of current market conditions on hospitals.
Of the hospitals surveyed:
—80 percent have seen an increase in emergency room visits for uninsured patients.
—75 percent have seen a decrease in patient account collections.
—57 percent have seen a decrease in elective surgeries.
Hospitals have made or are considering the following changes in order to cut costs because of current market conditions:
—60 percent reduced patient services, and 33 percent are considering reducing services.
—31 percent eliminated vacant positions, and 35 percent are considering it.
—13 percent have reduced community benefit programs, and another 16 percent are considering it.
—9 percent halted construction, equipment purchases and other projects, and 20 percent are considering it.