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Monday, March 22, 2010

Abington Leaders Split on Health Bill

By Michael Vitez, Inquirer Staff Writer

The top two executives at Abington Memorial Hospital called the health-care bill that passed the House yesterday a necessary first step to improving the well-being of all Americans, though the hospital's chief financial officer was more pessimistic, fearing the bill would not do what legislators hope.

All three hospital officials said it was too early to tell exactly how the legislation, which the House passed last night, would affect the large community hospital in Montgomery County and its bottom line, especially since the legislation would take effect over a period of years.

"Health-care reform is the right thing to do from a public-policy perspective," said the chief executive officer, Larry Merlis, who came on board in February. "And it needs to start, and there will be incremental changes moving forward, but to do nothing now is unacceptable. . . . To me it's a disgrace we have not moved forward and we have so many uninsured."

"I support health reform," added Meg McGoldrick, the chief operating officer. "And I support this bill because I think it's a start. I do think there's a long road ahead of us, and I am concerned about how the money will really play out over time."

For instance, she said, the hospital can work hard to reduce unnecessary tests and procedures that doctors perform mindful of potential lawsuits, "but without tort reform, I don't know how far we're going to get." She saw an absence of substantial malpractice reform in the legislation, which Republicans had sought, as "a real problem."

The key provision of the bill is expanding insurance coverage to 32 million Americans. Merlis and McGoldrick said a big challenge would be to provide enough primary-care doctors to give all these newly insured patients care, but they expected Abington to meet this challenge.

When Massachusetts passed statewide universal health care in 2006, the state struggled with a shortage of primary-care doctors. Merlis said he did not expect a crush at Abington, and perhaps nationally, because the increases would come over years, and financial incentives are in the bill and elsewhere to increase the number of doctors entering primary care.

Merlis and McGoldrick said that with expanded access, Americans should get care sooner and become healthier over time. This would eventually lead to lower health-care costs.

Some of the bill's provisions would penalize hospitals for preventable errors and for readmissions of patients too soon after discharge. Abington and other hospitals are working hard to reduce errors and prevent readmissions – for moral and financial reasons.

Merlis said he was confident that payment methods to hospitals and doctors would be altered – not so much in this bill, but in revisions down the road. Instead of paying for quantity, what is known today as fee-for-service, reimbursements would go increasingly to "those who can truly show a better outcome," Merlis said.

McGoldrick said she was concerned about how "the cost of advances" – in technology and medications – would be funded in the new system.

She said she was pleased to see the physician self-referral restrictions in the bill. Physicians, she said, would no longer be able to own the business or equipment to which they refer patients.

Some of hospitals' most lucrative reimbursements come from providing scans and tests that physicians increasingly are performing at their own centers. This competition has hurt hospitals' revenue, McGoldrick said, which is necessary to offset the costs of providing care for which there is little or no reimbursement, such as clinics for the uninsured and the undocumented.

Michael Walsh, the chief financial officer at Abington, was much less optimistic. He said that hospitals must remain financially sound if they are to serve their communities, and that he fears the bill will undermine that. "I believe people want to do the right thing. In a perfect world, costs will be lower, everyone will have access, and everyone will be covered. I'm not sure the outcome [of this legislation] is going to be the outcome people are looking for."

He said it required a "leap of faith" to believe that the revenue brought into hospitals by the newly insured 32 million Americans would offset the loss in reimbursements from private insurers.

Typically, in the current system, Walsh said, Abington covers the cost of caring for its uninsured and Medicaid patients – for whom the hospital is poorly reimbursed relative to the actual cost of care – by charging private insurers a little more.

The hospital will be in financial trouble if it receives Medicare or Medicaid rates for these newly insured Americans, and the hospital simultaneously loses the buffer from its privately insured patients.

And with 60 percent of Abington's costs coming from wages and benefits, the only way to reduce those costs is to reduce hours or employees, Walsh said.

The notion that "poof, we have this health-care legislation and now there's coverage and the problems go away," is incorrect, he said. "If they think the problems will be solved, I don't think they understand the problems."

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