Dive Brief:
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Singing River Hospital in Pascagoula, Miss., is eliminating its neurosurgery department in an effort to slash spending, which will force some trauma patients out-of-state to Louisiana for treatment, The Clarion-Ledger reported.
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The department was not financially viable due to a low volume of cases, but “it doesn’t mean we won’t do it again,” Brian Argo, chief financial officer for the county-run health system that runs Singing River, said.
- After posting a $34.7 million loss in FY2014, Singing River Health System turned a $5.2 million profit in FY2016, but has taken on around $80 million in debt and is spending more than expected through pension programs.
Dive Insight:
Singing River Health System has made progress since losing almost $35 million a few years ago, but is still looking for ways to cut back. Scaling back on salary and benefit expenses and on professional fees helped Singing River to enter the black last year.
Many health systems are still making tweaks to business models and care delivery systems as they adjust to new payment models and policies introduced over the past several years. While some are doing better than others, most are strained. More than a half of hospitals have seen operating incomes dip in recent years, which is due largely to policy changes for which hospitals were unprepared and underfunded to confront, Cleveland Clinic CEO Toby Cosgrove said recently.
Some health systems have not been able to keep up with the pace of change and their financial future is not looking so bright. Catholic Health Initiatives has engaged in numerous cost-cutting measures, including a recent round of layoffs and elimination of positions, but has recently had its ability to repay debts questioned by bond rating agencies.
Some health systems with sunny financial outlooks are still making similar changes. For instance, Banner Health has seen operating margins increase from 2015 to 2016, but is still targeting positions and salaries in a restructuring of operations aimed at reducing costs. As utilization of outpatient services increases, many health systems are consolidating sites of care where highly acute treatment occurs as utilization of outpatient services increases.
Certain policy changes could help to ease the transition to new reimbursement models for providers and there may be an appetite for these among lawmakers. The Senate is currently considering legislation that would expand Medicare coverage for telehealth, which has been eyed as a potentially significant cost-cutting tool. However, while lawmakers consider policy changes, providers will likely have to deal with ongoing growing pains.
