Sampson Regional Medical Center CEO David Masterson, left, looks over some budget paper work with Chief Financial Officer Jerry Heinzman.

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With state and federal financial belts being tightened in this ever-so-stingy economy, governments and education have been working feverishly to cushion the blow to their budgets. Like every other entity, health care providers are also working to have some sort of balance even as it is clear that they are facing a no-win scenario thanks to the economy.

“First of all, I want to be clear that the hospital is not closing nor are we laying any of our employees off,” admonished Sampson Regional Medical Center’s Chief Executive Officer David Masterson. “We are doing everything we can do to preserve the services we already have in place and sustain the employment for the people we have here. It may be that we slow down on hiring a little bit, because there are some pretty drastic cuts that we are taking from Medicare and Medicaid over the next year.”

Most concerning for Masterson, as well as other health care providers, is that there is still a big unknown about the total amount of cuts.

“I don’t know what the total impact will be to us because we don’t know what the total cuts will be yet,” he said. “All the discussion with debt ceiling certainly points towards Medicare as an opportunity for the federal government to cut benefits for the senior,s and any further cuts in Medicare will, were are told, have a direct pass through to hospitals … so we could see up to another million dollars of actual bottom line cuts coming through with the debt ceiling reduction discussions in Washington — that will be the direct impact on this hospital, which will force us to rethink some of the things we are doing. Everybody wants us to redesign health care, and we are open to that, but we may have to stick to the steak and potatoes type of health care.”

Masterson attested to the fact that the hospital has worked to reduce waste at every turn. “We are redesigning health care within our hospital. We are working in our operating rooms now and some of the redesign that we have already done has resulted in patient improvement and patient satisfaction. We have also had some reduction in supply costs and certainly in some labor redundancies that we have. So we are beginning to see some interesting things in our design.”

But those efforts cannot stop the cuts already sent down by the state.

“We are taking about a $400,000 reduction in funding with the Disproportionate Share Hospital (DSH) program,” Masterson explained. “That is right off the top.”

The Disproportionate Share Hospital (DSH) adjustment payments provide additional help to those hospitals that serve a significantly disproportionate number of low-income patients. Eligible hospitals are referred to as DSH hospitals. States receive an annual DSH allotment to cover the costs of DSH hospitals that provide care to low-income patients that are not paid by other payers, such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) or other health insurance. This annual allotment is calculated by law and includes requirements to ensure that the DSH payments to individual DSH hospitals are not higher than these actual uncompensated costs.

“I would say that all the concepts of health care reform are great, but nothing has been put into place and they are already cutting the funding,” he asserted. “They are assuming that people are going to be able to get health care somewhere else and we don’t know if that will be happening. So we are expecting a $400,000 reduction.”

They will also see cuts to Medicaid. “Hospitals in North Carolina opted to take a higher hospital cut to not allow the doctors to get cut,” he said. “People don’t understand this, but a lot of our primary doctors really do live hand-to-mouth. The extravagant lifestyle of a physician is not necessarily out there, especially in primary care. So, as a hospital group in the state, we opted to take a higher cut, so we are taking a nine percent reduction for patient reimbursement from the state for Medicaid. For us, it is going to result in another $200,000 cut.

“We keep taking cuts in reimbursement and inflation is still there; costs are going up,” he continued. “We don’t have a bottom line. We are not even breaking even for this year. We are stretching it to make about a $100,000 bottom line this year. So when you take off that $600,000 that is where we are at.”

Looking down the barrel of those kind of cuts, administrators took a closer look at some of the programs they were providing.

“We really did have to look closer at programs that we had traditionally funded but don’t make money from, and then those, perhaps, other people can’t provide,” he said.

Two Home Health program that served two children and nine adults have been axed.

“At the request of the state, a few years ago, we started to provide home health services to children with severe disabilities, whose parents were unable to work and had to stay home with the kids,” Masterson said. “We had two children who were on that program and we were actually coordinators for the state in the area of providing and coordinating that type of care, even if it was from another area. We were paying for that coordinator. That program was resulting in a pretty major loss and one we couldn’t continue to sustain it with these cuts from Medicaid and Medicare.”

The other program is the home health for (9) disabled adults who are mentally retarded or developmentally disabled.

Both programs cost the hospital a quarter of a million dollars a year to run. To their credit, hospital officials, along with Denise Hobson, director of Home Health, met with the families involved with the program and the new providers to make the transition smoother. The transition should be complete by September.

“We have worked this year with other providers in the county and out of the area that can help these families,” said Masterson. “It is really heart-wrenching to tell the families that we would not be providing the services anymore. I really hate to say we had to step away from the program, and it is gut-wrenching, but for us, we just couldn’t sustain that loss anymore.”

Debunking a myth

Some people may think that they can get needed medical care from a hospital, skip out on paying the bill and be assured that the hospital will still get is payment from government programs.

Not so, says Masterson, who noted that if a patient is in need of treatment, they will be seen, however, if that bill is not paid, it falls on the hospital, becoming a financial loss.

Surprisingly, it is something that the CEO empathizes with.

“Look, when you are under that kind of stress of being unemployed, you get sick,” he said. “We will continue seeing people who cannot pay, but I want people to understand it is becoming more of a stretch for us to do that. Honestly, I think people are tired of hearing that. But we have to do something. If they come and need to be seen, we will see them at the emergency room. But it does mean that we are going to ask more questions on the front end and maybe set a higher expectation that we receive payment at the time of service. I think people can anticipate that we will be asking, ‘how do you plan to pay for your visit today’.”

To help, the hospital has enlisted an outside company that will assist patients with financing their bills for up to five years.

No matter what happens with the additional cuts to health care, Masterson said that he, as well as his employees, will continue to work to provide the best health care available.

” At the end of the day, we have people who need health care and health care providers who want to provide it,” he said. “The government is just going to have to match that up. I think one thing that concerns me is that the government redirects health care into the government, when the government isn’t prepared to provide the level of care they think they can provide.”

To reach Doug Clark call 910-592-8137 ext. 123 or email to sisports@heartlandpublications.com.