Florida budget cuts millions from Jackson and Memorial hospitals
South Florida hospitals, including Miami-Dade’s Jackson Health System, will lose an estimated $124 million in funding in 2022 after state lawmakers this week cut the so-called Critical Care Fund that provides additional payments to about two dozen Florida hospitals with the highest share. patients covered by Medicaid.
State lawmakers say hospitals will still benefit from a new payment system that Florida launched last year to address the financial shortfall these hospitals are experiencing due to Medicaid reimbursements, which are so low they don’t not cover the cost of care.
But hospital administrators and lobby groups say the new system, called the “Direct Payment Program,” was designed to address low Medicaid reimbursement rates for all Florida hospitals and does not address the financial shortfall. persistent for medical centers with disproportionately high volumes of Medicaid Patients.
“If you are losing money on every Medicaid patient and caring for a much larger number of Medicaid patients, you should be receiving additional support from the Medicaid program to preserve that access,” said Mary Mayhew, president of the Florida Hospital Association, an industry lobby group. .
Hospitals with high proportions of Medicaid patients also generate lower profit margins than the industry average, and all hospitals have been forced to spend more on staff and resources during the pandemic, said Justin Senior, president of the Safety Net Hospital Alliance of Florida, an industry lobby group for pediatric, public, and academic hospitals
“Staff costs and the inflation rate have been higher,” he said. “Everyone is waiting to see where it stabilizes…and what the new costs of doing business are.”
Local hospitals impacted
In Miami-Dade and Broward counties, the hospitals that will lose the most are taxpayer-funded medical systems that have children’s hospitals, labor and delivery wards, neonatal intensive care units, and level 1 and 2 traumatology.
Jackson Health, owned by Miami-Dade taxpayers, will see a cut of about $72 million, and Broward’s two public hospital systems, Memorial Healthcare System and Broward Health, will lose a total of $42 million.
Baptist Health South Florida’s Homestead Hospital will lose about $4.5 million, and Miami’s North Shore Medical Center is expected to take a cut of $733,000, according to estimates provided by the Florida Hospital Association, an advocacy group and industry lobbying.
However, some hospitals have been spared the worst of the cuts. Florida lawmakers have included nearly $85 million in additional funding for select children’s hospitals, such as Johns Hopkins All Children’s in St. Petersburg and Nicklaus Children’s Hospital in Miami.
Nicklaus Children’s reportedly lost $33 million, but the special payment approved by lawmakers replenishes $30 million, resulting in a loss of $3 million due to the elimination of the critical care fund.
A new system to fund hospitals
State lawmakers said they ended the critical care fund because the new payment program would make up for the financial shortfall experience suffered by the two dozen hospitals eligible for the supplemental revenue. These hospitals were eligible for critical care funds because more than 25% of their patients were enrolled in Medicaid during the year.
Hospitals with children’s medical centers, neonatal intensive care units, labor and delivery units, and level 1 and 2 trauma centers are most likely to be affected. Children make up more than half of the more than 5.1 million Floridians on Medicaid, and Medicaid pays for about half of all births in the state.
In 2021, the state distributed $309 million to 28 hospitals eligible for critical care funds. But in its first year, the directed payment program generated nearly $1.8 billion in additional Medicaid funds for hospitals that agree to participate in the program and pay a fee. Different rules apply depending on who owns a hospital, but under the program, local governments levy a tax on hospitals and then use those taxes to raise matching federal funds for Medicaid.
The federal government matches Florida’s Medicaid spending at a rate of approximately 67%, meaning that for every dollar Florida spends on Medicaid, the federal government contributes two dollars. The funds are then disbursed to hospitals to fill the revenue shortfall created by low Medicaid reimbursement rates.
But qualified hospitals will continue to see disproportionately high shares of Medicaid patients, and the directed payment program does not fully close the gap between Medicaid reimbursements and hospital costs to provide care for those patients, said Mayhem from the FHA.
“Hospitals will go from 60 cents on the cost dollar to nearly 84 cents,” she said. “And there’s no guarantee of those payments next year.”
Smaller margins, higher costs
The head of the Safety Net Hospital Alliance said hospitals that received funds for critical care collectively generated a profit margin of around 3% compared to the industry average of 10%.
“If you see that many Medicaid patients,” he said, “it’s pretty much a done deal that you’re going to see lower margins.”
Now that hospitals are coming down from a record spike in inpatients fueled by the omicron variant, many facilities are resuming rounds and other normal operations. But although the omicron surge is receding, hospital administrators say the pandemic continues to be unpredictable and they should prepare for the possibility of another surge in the summer or fall.
In addition, the additional costs they incurred for staff and supplies have not diminished, especially as inflation continues to climb, said Aurelio Fernandez, CEO of Memorial Healthcare System, the public hospital network. of South Broward, which includes six hospitals, a Level I trauma center, a pediatric medical center and 14,000 full-time staff.
“Our nursing costs alone, between travellers, compensation for incentive compensation and shift differential are $20 million more per month this year than they were in 2021,” Fernandez said. “Is it sustainable? That’s $240 million a year. It’s not sustainable.
“You know what my concern is,” he said, “I don’t see the light at the end of the tunnel because there’s a shortage of nurses and the fact that you can’t get nursing degrees. nurses at the pace we need. Because there are not enough professors in universities and colleges, it’s going to be a long road.
This story was originally published March 11, 2022 7:32 p.m.