According to a new Moody’s Weekly Credit Outlook report, the Jindal administration’s cuts to the LSU hospital system will have a negative financial impact on private hospitals throughout the state. But health care providers have already been feeling hits and continue to adapt to the state and the federal government’s funding, making the LSU System’s issues just another reason to adapt.
The report addressed LSU Health Care Services Division’s plans to lay off employees, reduce the number of hospital beds and discontinue some medical services as it implements a $29 million cut precipitated by Gov. Bobby Jindal’s midyear budget cuts.
The Moody’s Investment Service analyst state in the report that “with these changes, many Medicaid dependent, uninsured patients that formerly used services provided through LSU’s public hospital system are likely to seek care at non-governmental facilities, include private not-for-profit (NFP) hospitals.”
Adding new indigent patients at private NFP hospitals could hurt their ability for lower-cost borrowing because government reimbursement for Medicaid and indigent care patients does not fully cover the cost of patient care. “Hence, it will have a negative impact on non-governmental facilities hospitals’ profitability and debt service coverage,” the report from the bond rating firm concludes.
Moody’s added that the exact financial impact on the NFP hospitals cited “is difficult to quantify.”
Louisiana’s Department of Health and Hospitals Secretary Bruce Greenstein, for his part, disputed the analysis.
“It doesn’t look like they have done a lot of their homework,” he said.
But the cuts to the LSU System are just part of the problem according to Terry Osborne, American Legion CEO.
“Everybody is going to have to take a look at how they operate to cope,” he said. “The cuts by Louisiana and the federal government to Medicare and health care system have been going on for a while now and we must continue to adjust each time.
“It’s a constant fight for not only hospitals but physicians and other health care facilities as well.”
Greenstein calle dthe LSU cuts “efficiencies” required because the LSU hospitals in south Louisiana were running over budgeted amounts. LSU claims it has generated extra money as it provides services but the dollars are being moved to prevent DHH program cuts.
“We don’t know what cuts in the LSU System will look like.” he said, noting that LSU has not released a specific budget reduction plan as yet.
“All of this is speculation,” said Greenstein. “I suspect that Moody’s is unable to do a proper analsysis because they don’t have all the information.
Louisiana Hospital Association President John Matessino said there will be some impact on hospital finances because of more free-care patients and potential increased use of private hospital emergency rooms.
“It certainly is not a good thing. It certainly messes up the equilibrium of care,” he said.
Matessino said a recent hospital survey indicated that 78 percent of the in-patient Medicaid services are done in private hospitals. The greatest impact on hospitals will be any resulting influx of uninsured patients, he said.
Some of the hospitals could fare better than others because of “their larger size and diversification in location, organizations such as The Franciscan Missionaries of Our Lady Health System and Ochsner Clinic Foundation,”according to the Moody’s report.
“People are really going to have to think about their health care coverage just as we (in the health care community) are going to have to think about how we provide care with these cuts,” said Osborne.Hospitals continue to take hits
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