Medicaid expansion proponents say they’ll make another attempt to expand Obamacare in Kansas when the state legislature reconvenes for wrap up session next month. Advocates cite potential hospital closures in Kansas as a major concern, but to date, local media hasn’t bothered to ask why those hospitals are in danger of closing. Media instead prefers to repeat hyperbole of lobbyists and liberal lawmakers.
Medicaid expansion may not be the prescription to cure what ails some Kansas hospitals. Rep. Blake Carpenter, a Derby Republican, said proponents of Medicaid expansion admitted as much when the Kansas House debated an expansion proposal in March.
“At the well, (expansion proponents) ended up saying, just because we pass Medicaid expansion that doesn’t mean it will save hospitals. It will potentially save some,” Carpenter said. He said expansion simply applies pressure to a wound.
“I don’t think it would be the magic bullet that saves all rural hospitals,” he said.
St. Francis Hospital in Topeka
Rep. Fred Patton, a Topeka Republican even changed his vote on Medicaid
expansion citing potential hospital closures. Patton voted against expanding Medicaid initially, but voted to override Gov. Brownback’s veto. St. Francis, one of two Topeka hospitals, is currently for sale. The other Topeka hospital, Stormont Vail, is a 568-bed institution about 1 mile away from St. Francis.
“With one local hospital for sale and both absorbing increasing financial pressures, I am also concerned with ensuring health care access for our families,” Patton said in explaining his flip-flop.
St. Francis is a Catholic-based, non-profit Topeka hospital owned by SCL Health in Denver.
SCL announced its intention to sell St. Francis in May 2016, shortly after mergers and acquisitions of hospitals hit an all-time high in 2015. Financial experts theorized the huge spike in hospital mergers and acquisitions was, in part, due to the costs smaller hospitals incurred from the Affordable Care Act, or Obamacare, which doesn’t cover the full cost of treating patients with Medicaid.
SCL sold two Kansas City hospitals in 2013. It currently owns six Colorado hospitals, three Montana hospitals and Topeka’s St. Francis.
St. Francis lost money in 2015, according to its annual financial report. If Medicaid expands, St. Francis stands to gain $9.9 million additional funds to treat Medicaid patients. However, Medicaid doesn’t pay hospitals what it actually costs to provide care, making it a fiscal loser for most hospitals. St. Francis lost $12.5 million last year, according to its annual financial report. SCL Health, its owner, lost more than $120 million treating Medicaid patients. Despite Medicaid reimbursement losses, the company earned profits in 2013 and 2014–the last year for which information is available.
This isn’t just a Kansas problem or a St. Francis problem.
According to the American Hospital Association, treating Medicaid patients cost hospitals $13.2 billion in 2013. Hospitals received about 90 cents for every dollar they spent delivering healthcare to patients with Medicaid.
Privately-insured patients moving onto the Medicaid rolls after expansion would compound the problem. Opponents to expansion believe Kansas would add 150,000 to the Medicaid rolls under expansion; 71,000 of those would be individuals moving from private insurance to Medicaid.
Changing Healthcare Models
Depleted Medicaid reimbursement rates aren’t the only reason many hospitals are merging or closing. The healthcare industry is changing, and many hospitals are discovering they don’t need hundreds of beds. So healthcare organizations like SCL Health are investing in microhospitals.
Microhospitals focus on outpatient care. They offer emergency services and a handful of hospital beds for patients who need inpatient care.
St. Francis Health Center has 378 beds, and is located within a mile of a hospital with 586-beds. That may be too many beds for a city the size of Topeka. According to the American Hospital Association, inpatient hospital admissions are plummeting, while outpatient care is increasing. Between 2010 and 2014, inpatient admissions dropped by 2 million, while outpatient visits jumped by more than 42 million.
SCL Health, St. Francis’ owner, operates two microhospitals in the Denver area, and more are in the works. Though SCL Health isn’t building them in Kansas, other health systems are. Officials from St. Luke’s Health System of Kansas City, Missouri, told the Associated Press in 2016 that it plans to build microhospitals in Roeland Park, Overland Park, Leawood, and Kansas City, Kansas.
St. Francis’ Future
Expansion proponents often cite the closing of Mercy Hospital in Independence, Kansas, as a victim of the state’s failure to expand Obamacare. However, when it closed in 2015, Mercy officials listed declining populations, physician recruitment and retention, and shrinking reimbursements as factors driving the decision. Medicaid expansion didn’t make the list.
Last week, SCL Health officials refused to tell the Topeka Capital-Journal whether they plan to close St. Francis if it doesn’t sell. St. Francis has been on the market for 11 months, but it’s not unusual for hospital mergers and acquisitions to take longer than 18 months once a buyer is secured.