States’ refusal to accept federal Medicaid money frustrates MSHA leaders

Gary B. Gray • Nov 15, 2013 at 9:22 PM

The leadership transition at Mountain States Health Alliance reveals no loose threads when it comes to solidarity of thought, especially federal and state legislation and its effect on hospitals and patients.

Current MSHA President/CEO Dennis Vonderfecht, who will end his tenure at the end of this year, and his successor, Alan Levine, discussed these and other issues during a Johnson City Press Editorial Board meeting Friday. Both men talked about the frustration created by the implementation of the Affordable Care Act and Virginia and Tennessee’s refusal to accept federal funds to expand Medicaid coverage.

They also were on the same page regarding plans to recover the estimated $300 million that will be lost under the Affordable Health Care Act and sequestration. Both have seriously hurt expectations for future revenue. Gov. Bill Haslam has so far said he is not willing to expand TennCare, though he may allow some expansion under the federal plan. Both Vonderfecht and Levine simply are asking that the governor provide the medical industry with a solid foundation from which to work.

“The situation in Washington is toxic, and the governor’s actions mean smaller reimbursements,” Levine said. “The group that’s been left out in the cold is the working poor. The objective is to make sure the patient is in the environment in which they need to be.

“It’s frustrating to watch, because a doctor knows. They will be watching and seeing what the patient needs, while policy dictates what happens. These policies, while well intentioned, have unintended consequences. (Legislators) don’t begin with meaningful dialogue; they begin with documents.”

MSHA cares for about 12 percent of people who have TennCare, as well as 9 percent of people who don’t have any insurance at all. In addition to that financial imbalance, the organization is working with an operating-expense budget that’s a mere 3 percent above its absolute needs.

He also said relatively low enrollment in the national health care insurance exchange has caused a hardship for Tennessee and other states.

“We have to deal with the issue of reimbursement cuts and high-deductible health plans, and we’re seeing a drop in volume and revenue,” Levine said. “It’s estimated we’ll lose about 30 percent of our inpatient volume. State revenues are down, and the pure economics of (accepting federal funds) makes sense. Where do you think physicians will relocate? And that’s billions of dollars being extracted out of the Tennessee economy and the community.”

Vonderfecht said MSHA reduced its employees by 617 since March, which saved about $500,000.

“It is an economic impact to our community, but it’s what’s happening with health care,” he said. “We really need some leadership from the governor. The Legislature is supportive, but they’re waiting for the governor to take the lead.”

Vonderfecht said about $22 million has been saved over the last year and a half by adopting a “lean” strategy, which includes raking through every process that occurs on a daily basis and identifying what level of care is provided to patients.

“Even if we have the greatest success in the world, we’re going to have a reduction in revenue,” he added.

Levine said the new policies were put in place 2-3 years before the ACA became law.

“Still, we’re getting 20 cents on the dollar in reimbursements but incurring 100 percent of the costs,” he said. “It’s a lot for an industry to manage. In my career, I can’t think of anything that has affected the industry like this. The biggest challenge going forward is there’s not going to be enough residency slots for graduating medical students.”

Meanwhile, Levine, who currently operates 23 Florida hospitals, said he is in the process of buying a house in the area.

“Everybody’s been so welcoming,” he said. “The community here has sophisticated medical services, which is good for economic development.”

He said he has noticed there may be a larger-than-normal segment of the population here that have pulmonary problems, with smoking being one identifiable source. But regardless of the illness or disease, he said he wants to “get out in front of it so it does not become an epidemic.”

Vonderfecht said he plans to spend more time with his family in the coming years. He also cited Niswonger Children’s Hospital, improvements in JCMC’s air transport capabilities and the help and cooperation of the MSHA board of directors as highlights during his career at MSHA.

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