RICHMOND, Indiana — Prices for everything seem to continually be on the rise. And the cost of health care is no exception.
Citing continuing and complex challenges with reimbursement and numerous other pressures on health systems nationally, Reid Health of Richmond, Indiana, announced that its annual rate increase in 2017 will be held to 5.6 percent.
“The pressures on all health care systems and organizations in the nation continue to be extreme,” said Reid Health President/CEO Craig Kinyon. “Organizations that are not being proactive in the face of these challenges and reinventing themselves — and at the same time continuing to improve quality and delivery, may not remain successful.”
Reid’s Governing Board this week approved the 5.6 percent annual rate increase, he said, which is equal to the Hospital & Related Services component of the national Consumer Price Index (CPI). Kinyon said financial challenges for health care continue, noting that the Reid Health system team continues to be proactive in promoting community wellness, reduce costs through care coordination, expand chronic disease patient management programs and ensure the health system attracts and retains quality providers to care for the population.
Kinyon said several unknowns remain for health care, noting that nationally many rural hospitals have been unable to survive the financial environment of the last few years.
“Our team members, our administration and our board have taken these challenges seriously and taken steps to keep our health system competitive and viable,” he said.
Kinyon again noted Reid Health’s continued emphasis on wellness and prevention, annual check-ups and age-appropriate health screenings. He said the shift in how health systems are paid from “fee for service” to “fee for value,” ties reimbursement to providers to patient quality indicators, reduction of readmission rates, and patient experience scores.
Challenges remain, Kinyon said. The continued increase in bad debt, charity care and Medicaid payment shortfalls at Reid from about $60 million in 2008 to more than $158 million in 2016 (excluding Medicare shortfalls) are among them.
Kinyon also noted that a large percent of Reid’s business is from Medicare and Medicaid patients, both of which pay at rates below the actual charges, but more importantly, pay below the cost of health care.
Medicaid, for example, pays about 31 percent of the actual charges, resulting in a write-off of $102.6 million in 2016. Medicare write-offs at Reid are projected to be $319 million in 2016.
The Medicare and Medicaid shortfalls, combined with anticipated levels of charity care and bad debt, mean Reid will incur costs but not be paid for nearly $478 million in charges for care in 2016. These dollars billed to Medicare, Medicaid and the under-insured that are not paid, continue to result in higher costs to commercially insured patients, according to Reid.
Larry Price, Media Relations Specialist with Reid, told The Daily Advocate that the 5.6 percent rate increase is not all encompassing.
“The increase is an average of multiple charges, for hospital services only, not an across-the-board number,” he explained.
Nonetheless, Price added that Reid’s shortfall for 2017 will likely exceed that of 2016.
“We would certainly anticipate that it will grow, based on increasing enrollment in Medicare and Medicaid,” he said.
The future outlook on healthcare costs remains cloudy as it relates to potential legislative changes to the Affordable Care Act, aka “Obamacare” — changes which could be initiated by the Republican Congress and President-elect Donald Trump in the next few years.
“We believe it’s just too early to predict the immediate effects of the potential changes or elimination of ACA with the new administration,” said Price. “We remain hopeful for a reasonable solution, and have been in contact with our federally elected officials and emphasized the importance of maintaining a funded program for the uninsured citizens in our nation.”
Though headquartered on the Hoosier side of the Ohio-Indiana state line, Reid Health treats thousands of patients in Darke County and other Western Ohio locales. Reid estimates approximately 15 percent of its clientele resides in Ohio.
In an effort to provide services closer to its Buckeye patients, Reid opened a Hospital & Healthcare Services’ Medical Office Building in Greenville, Ohio, in June 2015. It houses Bethel Cardiology; Reid Orthopedics; Reid ENT; Reid Neurology Associates; Richmond Rheumatology Center; Reid Psychiatric Associates; and Urological Care.