Looming Budget Cuts Make Hospital Belt-Tightening Increasingly Difficult

John Commins, for HealthLeaders Media , March 5, 2012

The federal budget also calls for about $52 billion in cuts to federal funding for Medicaid in the coming years. Moody's said those changes could include replacing current funding formulas with a single matching rate for each state, rebasing disproportionate share payments, and limiting the federal funding match for provider taxes.

"A limit on federal matches for provider tax payments would be a significant development because these programs have proliferated significantly over the past several years, and receive on a combined basis an increasing amount of federal support," Moody's said.

"Prior to 2008, 15 states operated provider fee programs. Today, this number has grown to 33, with another three states considering a program. These programs most benefit hospitals with high exposure to indigent populations and their elimination would negatively affect those hospitals the most," the report said.

Goldstein says the federal government could eventually shut down provider tax schemes as a cost cutting measure for the federal deficit. "Most hospitals realize that these provider tax programs may not go on forever," she says. "We look to hear how those hospitals and management teams will lower their reliance on these funds. How are you going to manage if this program abates one day?"

John Commins is a senior editor with HealthLeaders Media.

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1 comments on "Belt Tightening Gets Tougher for Hospitals"

ANTHONY WUNSH (3/11/2012 at 10:38 AM)
The area they can have the most impact on to reduce these potential challenges is revenue cycle. There is billions in wasted costs, and hundreds of billions in uncollected dollars. Slow pay and no pay by both patients and insurance and government is an epidemic and can not be sustained. I have been preaching for three years, we need to impact what we have control over and the processes used to manage revenue cycle are out dated, inefficient and broken, They were never designed to handle 31% patient responsibility or the additional mandates in audit, meaningful use and technology. WE lose in wasted cost or lost revenue over 800 billion dollars a year now, imagine this impact on the cost of care delivery. Also in charitable care the cost to process and time to process these patients is so cumbersome that more than 80% never get processed and these dollars are just written off. I would love to share more if you request it




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