Paduda: More Bad News

Tuesday, April 5, 2022 | 0

Here are two things that will likely increase facility costs.

Becker’s reported last week that so far this year, hospital and health system margins (with some very notable exceptions) are pretty crappy: down almost 12% month over month in February, and a whopping 42% below February 2020 (just before COVID).

My bet is that significantly higher staffing costs are a major contributor. The giant Henry Ford system said labor costs were up 8% in February over the same month in 2021; Providence’s increase was even higher at 10%.

Couple that with a steep drop-off in health insurance coverage as COVID-related Medicaid coverage ends, and you can expect facility costs to jump.

That’s because we’re going to see a lot more uninsureds seeking care at hospitals.

Medicaid is likely the single largest payer today, with about one out of every four of us covered by it.

The problem will be especially acute in states that have not expanded Medicaid. If your members/insureds/injured workers are in those states, you’ve already been paying a hidden tax to help pay for uninsured care delivered by hospitals.

Since states can pretty much determine who gets Medicaid, the problem is even worse in places like Mississippi, which has long restricted Medicaid coverage to a very thin slice of the poor.

If you make more than 27% of the federal poverty level, you’re too rich to get Medicaid in Mississippi, which is both the poorest and sickest state in the nation (kudos to Louise Norris for her intel on the issue).

What does this mean for you?

Success favors the prepared. If you think you’ve got an answer to this, you’re likely wrong. 

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.