>> YOU MAY HAVE READ THE BAYSTATE HEALTH HAS ASKED THE
STATE FOR 10 MILLION IN BRIDGE FUNDING TO HELP THEM DEAL WITH A
COMPLICATED REIMBURSEMENT PROBLEM ON PAYMENTS THAT THEY
GET FOR TREATMENT OF SOME OF THEIR PATIENTS.
DR.
KEROACK, THE PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
BAYSTATE HEALTH, CAME IN TO EXPLAIN THIS SITUATION AND THE
POSSIBLE ACTIONINGS NEEDED IF THEY DON'T GET THE REQUESTED
ASSISTANCE.
>> IT IS AN INCREDIBLY COMPLICATED SITUATION BUT HERE'S
THE SORT OF SHORT VERSION OF IT.
BAYSTATE IS THE LARGEST PROVIDER OF SERVICES FOR THE POOR FOR
MEDICAID PATIENTS IN ALL OF WESTERN MASSACHUSETTS, BY A
FACTOR OF THREE OVER THE NEXT LARGEST PROVIDER.
ABOUT 25% OF OUR PATIENTS ARE PAID FOR BY THE MEDICAID
PROGRAM.
MEDICAID UNDERPAYS COMPARED TO MEDICARE WHICH IS THE PROGRAM
FOR SENIORS.
THEY PAY 70 CENTS ON THE DOLLAR, SO WE LOSE 30% ON JUST ABOUT ALL
THE SERVICES THAT WE GIVE.
THAT AMOUNTS TO ABOUT A $45 MILLION HOLE THAT WE HAVE TO
DIG OUT OF.
THE FEDERAL AND STATE GOVERNMENT HAVE RECOGNIZED THAT IS BEING A
HEAVY MEDICAID PROVIDER CAUSES LOSSES TO OCCUR.
THERE ARE SUPPLEMENTAL FUNDS THAT ARE GIVEN OUT TO THE LARGE
MEDICAID PROVIDERS, EXCEPT FOR BAYSTATE.
BAYSTATE HAS BEEN EXCLUDED FROM THESE FUNDS FOR MANY, MANY YEARS
WE HAVE BEEN LOBBYING VERY HARD WITH THE LEGISLATURE TO GET
RECOGNITION OF THIS.
WE THINK THAT WE MAY GET SOME RELIEF FROM THE EXECUTIVE BRANCH
AND THE SECRETARY OF THE HEALTH AND HUMAN SERVICES WHEN THEY
REDO THE MEDICAID PROGRAM IN 2018.
BUT THAT'S STILL A WAYS AWAY AND WE ARE TRYING TO SEE IF WE CAN
PLUG THAT GAP.
>> LET'S PUT IT IN A LITTLE PERSPECTIVE.
CORRECT KNEE -- CORRECT ME AS WE GO, BAYSTATE IS A 2 BILLION PLUS
ANNUAL OPERATION BUT 45 MILLION A YEAR, WHEN YOU ARE IN THAT
KIND OF HOLD BEFORE YOU OPEN THE DOOR ON JANUARY 1st, THAT ADDS
UP, AND YOU HAVE BEEN EATING THIS FOR A WHILE.
YOU CANNOT GO ON FOREVER.
>> BAYSTATE, WHEN YOU ADD IN OUR HELP NEW ENGLAND, WE ARE 2.
5 BILLION, AND WE EMPLOY 12,500, AND WE'RE ABOUT 10% OF
THE ECONOMY OF HAMPDEN COUNTY, SO WE ARE VERY BIG, AND WE ARE A
VERY THIN MARGIN ORGANIZATION.
IF YOU LOOK AT MOST OF OUR PROFIT COMES AT THE BIG HOSPITAL
BAYSTATE MEDICAL CENTER IN SPRINGFIELD, WHICH TYPICALLY HAS
A MARGIN OF 70 MILLION A YEAR.
THE REST OF THE SYSTEM, WHEN YOU INCLUDE THE DOCTOR GROUPS AND
SMALLER HOSPITALS, LOSES ABOUT 30 MILLION, AND SO WE NET OUT TO
HAVE A MARGIN OF ABOUT 40 OR 50 MILLION A YEAR, WHICH SOUNDS
LIKE A LOT OF MONEY BUT IT ENDS UP BEING TWO OR THREE CENTS ON
THE DOLLAR, AND WE REALLY NEED TO HAVE A BIT OF A MARGIN LIKE
ALL NOT-FOR-PROFIT ORGANIZATIONS, WE NEED A LITTLE
MARGIN TO REINVEST IN THE FACILITIES AND REINVEST IN OUR
PROGRAMS, AND BUILD, REPLACE STUFF.
THAT SORT OF THING.
>> CORRECT ME IF I DON'T UNDERSTAND OR MISSTATE THIS, BUT
FOR HOSPITALS THAT DO NOT GET FULL REIMBURSEMENT ON THE
MEDICAID PATIENTS, NORMALLY TURN TO THE PRIVATELY ENSURED
PATIENT, AND A LITTLE MORE IS CHARGED THERE.
THAT DOES NOT WORK FOR BAYSTATE IF I UNDERSTAND IT RIGHT.
PARTIALLY BECAUSE YOU ARE NOT AS BIG OF A SYSTEM AS A BOSTON
HOSPITAL THAT HAS A DIFFERENT LEVERAGE, DIFFERENT PRESSURE
THAT THEY CAN WORK WITH THE INSURERS.
NOW -- >> JUST A BIT OFF.
IT DID WORK FOR YEARS FOR BAYSTATE.
I THINK THAT YOU KNOW, IN THE YEARS BEFORE HEALTH REFORM WE
COULD LOOK AT THREE OR FOUR OR 5% RATE INCREASES EACH YEAR FROM
THE COMMERCIAL INSURERS LIKE BLUE CROSS AND CIGNA.
EVER SINGS HEALTH REFORM HAPPENED THOSE HAVE BEEN FLAT SO
WE'VE BEEN FLAT IN TERMS OF GETTING ANY INCREASES FROM THE
MANAGED CARE PROVIDERS FOR FOUR OR FIVE YEARS NOW.
THE PERCENTAGE OF THOSE PAIRS HAS SHRUNK DOWN.
RIGHT NOW TWO-THIRDS OF THE REVENUES COME FROM GOVERNMENTAL
PROGRAMS, MEDICARE AND MEDICAID, SO FLAT REIMBURSEMENT FROM THE
GOVERNMENTAL PAYERS AND FROM THE COMMERCIAL PAYERS BUT OUR
EXPENSES KEEP GOING UP AT 3% A YEAR OR SO.
BOTH WAGES AS WELL AS DRUGS, DEVICES, ALL THE USUAL COSTS ARE
GOING UP.
SO YOU DO THAT MATH, AND IT DOESN'T WORK.
YOU CAN'T JUST HAVE ZERO INCREASES ON THE REVENUES AND 3%
ON THE EXPENSES WITHOUT GETTING INTO TROUBLE EVENTUALLY.
>> LET'S TALK ABOUT THE IMPACT THAT YOU HAVE, GOING TO THE
LEGISLATURE, BEFORE THE COMMITTEE, EXPLAIN WHAT'S GOING
TO HAPPEN.
I KNOW OUR LOCAL LEGISLATORS WHO ARE IN HERE REGULARLY FOR
DIFFERENT SEGMENTS WE DO ARE TAKING THIS VERY SERIOUSLY.
YOU HAVE TOLD EVERYONE, A SIGNIFICANT NUMBER OF JOBS MAY
HAVE TO BE LOST, I THINK 200 IN TERMS OF JOBS THAT HAVE BEEN PUT
AROUND.
I DON'T THINK THAT, AND CORRECT ME IF YOU HAVE SPOKEN
SPECIFICALLY ABOUT THE PROGRAMS AND THE AREAS BECAUSE OBVIOUSLY
THAT CAUSES A LOT OF DIFFICULTY FOR YOUR EMPLOYEES, BUT WHAT
KIND OF IMPACT IF YOU DON'T GET SOMETHING IN THE WAY OF THE
10 MILLION YOU ARE LOOKING FOR, THE HOUSE PUT A MILLION IN, AND
THAT'S ONE-TENTH OF WHAT YOU NEED, AND, OR HELP.
>> LET ME FIRST ACKNOWLEDGE WHAT YOU SAID, AND THAT IS THAT WE
THE LOCAL DELEGATION, CENTER ROSENBERG AND SENATOR LESSER AND
WELCH HAVE BEEN FABULOUS FOR US ON THE HOUSE SIDE, AND YOU KNOW,
REPRESENTATIVE SWAN AND PUPULO, AND WAGNER, REALLY, GONZALES,
THE WHOLE DELEGATION HAS BEEN BEHIND US.
THE STICKING POINT HAS BEEN THAT THE BUDGET AND THE HOUSE IS VERY
TITLE CONTROLLED BY THE TOP OFFICIALS WHO ARE ALL FROM THE
EASTERN PART OF THE STATE AND SEEM TO BE UNMOVED BY THESE
ARGUMENTS.
WE HAVE GOTTEN TRACTION WITH THE SECRETARY OF HEALTH AND HUMAN
SERVICES WHO IS WILLING TO REWRITE THE RULES AND REDESIGN
THE MEDICAID PROGRAM IN WHICH BAYSTATE WORKABLE FOR
SUPPLEMENTAL FUNDING.
IN TERMS OF WHAT HAPPENS FOR REVENUES, WE'VE BEEN UNDER
CONTINUOUS PRESSURE THESE LAST SEVERAL YEARS.
EACH YEAR WE TRY TO DO CREATIVE THINGS AND CONSOLIDATE SERVICES
BECOME MORE EFFICIENT.
WE HAVE IDENTIFIED 100 MILLION IN RECURRING SAVINGS BY PAYING
LESS FOR MEDICATIONS.
AND SO WE'RE GOING TO CONTINUE TO TRY TO DO THAT.
FOR EXAMPLE WITH THE ADDITION OF BAYSTATE WING AND NOBLE WE HAD
FOUR DIFFERENT COMPANIES, AND THEY WERE COMPETING WITH EACH
OTHER, DRIVING PAST EACH OTHER.
WE BROUGHT THEM ALL TOGETHER IN A COMPANY THAT DID RESULT IN
LAYOFFS AND EFFICIENCIES, AS WELL, IN TERMS OF THE WAY WE
SPEND MONEY.
WE'RE IN THE MIDDLE OF THOSE.
WE ARE NOT PLANNING TO GET ANYTHING FROM THE LEGISLATURE.
I AM GOING TO KEEP MY FINGERS CROSSED BUT NOT EXPECTING
ANYTHING GOOD IS GOING TO HAPPEN THERE IS GOING TO BE ANOTHER
HOLE.
I AM GOING BACK TO THE SAME PEOPLE WHO HAVE CLEVER IDEAS.
REDUCING PROGRAMS AND SERVICES THAT REALLY MAKE A DIFFERENCE TO
THE PATIENTS, LAYING PEOPLE OFF IS ALWAYS THE LAST RESORT.
THE SQUEEZE IS VERY INTENSE AND THE HOLE IS A BIG ONE RIGHT NOW.
IF EVERYONE WAS PLAYING BY THE SAME RULES I WOULD NOT BE AS
UPSET AS I AM BUT I REALLY THINK THAT IT'S REALLY A TERRIBLE
INJUSTICE BEING DONE TO THE PEOPLE OF WESTERN MASSACHUSETTS
THAT THEY ARE EXPECTED TO DO WITH LESS IN TERMS OF THE
SUPPORT FROM THE STATE GOVERNMENT THAN ALL THE OTHER
PROVIDERS FOR THE SERVICES FOR THE POOR.
>> WELL, DR.
KEROACK, CHIEF EXECUTIVE OFFICER FOR BAYSTATE
HEALTH, THANKS FOR COMING IN AND MAKING THIS SITUATION A LOT MORE
UNDERSTANDABLE FOR US AND OUR VIEWERS.
>> THANKS FOR HAVING ME.