America’s hospitals, their profits already squeezed by the nationwide drive to contain health costs, are bracing for more cutbacks as Congress prepares to patch up the Medicare program by slashing billions of dollars from their future revenues.
Hardest hit will be teaching institutions, where new doctors receive their basic training, and city hospitals that serve large numbers of poor and uninsured patients.
Republican blueprints for trimming future spending on Medicare provide for large reductions in payments for medical education and a 30 percent cutback in a special allowance for taking care of low-income people.
“We are very worried - there are five or six different ways in which we will get less money,” complained Martin Goldsmith, chief executive of Albert Einstein Medical Center in Philadelphia and president of the National Association of Urban Critical Access Hospitals, whose members serve masses of poor people.
House and Senate Republican leaders have offered separate proposals for lopping $270 billion out of Medicare’s projected growth over the next seven years. The Senate plan would cut Medicare payments to hospitals by $86 billion, while the House package calls for $75 billion.
These figures, large as they sound, could grow even bigger. Both plans rely on the movement of millions of Medicare beneficiaries from traditional fee-for-service care into less expensive managed care. If that doesn’t happen, Congress could turn to hospitals and doctors for billions in additional savings.
When government reimbursements came up short in past years, many hospitals were able to shift costs to patients with private health insurance.
But employers rebelled in the 1980s against soaring health insurance premiums. Insurance companies formed cost-conscious health networks, and health maintenance organizations proliferated. Insurers and HMOs turned to hospitals, demanding - and getting - deep discounts.
“Cost-shifting worked very well,” said Thomas W. Chapman, chief executive officer of George Washington University Hospital in Washington. “But we saw the evaporation of the surplus. Medicare (payment rates) used to be our floor, and now it is our ceiling in negotiations over managed care.”
George Washington and other teaching and urban institutions cannot compete on a strict dollar basis with suburban hospitals, where patients tend to be more affluent, healthier and have better medical insurance.