Uninsured Care

By Tarik Ait Maatallah, MBA, CMRM

  

Abstract

According to most reports, millions of people in the United States of America have no insurance coverage. US Census (2017) reported the American Community Survey stating that as of 2016, there were 27.3 million people without health insurance coverage. The Patient Protection and Affordable Care Act (PACCA) contributed enormously to reducing that number from a reported 47 million in 2014 (Gilbert, 2014). As policymakers struggle with health care reform both for structural and practical difficulties, they also try to figure out how to make sure people have access to care when they need it. This paper will look at the reality of the uninsured population in New York City (NYC). It will also look at a hypothetical hospital to list the different stakeholders, what they do or should do to keep hospital profitable while providing care to all people including the uninsured. Finally, the paper will address what strategies should be adapted to secure stakeholders buy-in and commitment to success.

Keywords: Uninsured, access to care, leadership, strategy, commitment, success, change, policy, profit.

Uninsured Care: Policy, Reality, and Strategy

New York City is one of the most important cities in the world. Its government structure is built around five boroughs each with a number of localities, and the policy structure includes dynamics with state and federal governments. The interactions are warranted by the constitutional responsibilities of each government level, but are also driven by the fact all parties have a stake in a city that hosts the largest financial district in the world. How should hospital deal with the reality of the uninsured in NYC to provide them with care without hitting the bottom line in a way that renders operations unsustainable?

SWOT Analysis

When people in NYC need care and do not have access to insurance, they pose a number of challenges. On one hand, they may overwhelm the emergency departments (ED) of the city for care because the Emergency Medical Treatment and Labor Act (EMTALA) mandates that any patient in ED must be stabilized and treated (or transferred) regardless of insurance status or ability to pay (Centers for Medicare & Medicaid Services, 2012). On the other hand, the increase in ED volume, which remains uncompensated because of high cost and patients having no coverage, risks destabilizing hospitals who do not have ways or the wherewithal to account for the financial loss. Hospitals spend millions of dollars on uncompensated care. The Mount Sinai Hospital (2016), for example, reported in its financial statements $42.7 million dollars in uncompensated care. The hospital had reported cost for charity care was approximately $39.6 million in 2016, and its provision for bad debt was approximately $16.1 million (Ernst & Young, 2017). Hospitals in New York City face the same challenges and cost is contingent on volume of uninsured and on hospitals’ ability to pursue patients for payment.

Demographics

New York City has an estimated 8,662,698 people that occupy 302 square miles. The city is also a bastion of diversity, where whites only are 43.1%, Hispanics or Latino alone are 29.0%, Black or African Americans alone are 24.4%, Asians alone are 13.7%, and 3.3% of the people identify as two or more races. NYC also has 12.4% of its population with no insurance coverage, which is 1,074,175 people. The city also recognizes that 20.3% of its people or 1,758,258 people are below the Federal Poverty Limit (FPL) (U.S. Census Bureau, 2018). Veterans account for 167,591 of New Yorkers, and that poses its own set of challenges as the care delivery is unique to that population and because poverty is rampant among them. Rosenheck, Frisman, & Chung (2011) found that veterans represented 41% of the homeless people in the USA, which is higher that the percentage of veterans to the general population at 34%. New York City’s population is also 37.2% foreign born (U.S. Census Bureau, 2018), not measuring the percentage of US born citizens whose parents were foreign born.

SWOT

The demographics described above create many challenges to hospitals in NYC. Some contribute to the strengths of hospitals; others exacerbate the threats, and some present opportunities. Hospitals ought to understand their weaknesses, and have total control over their strategy and operations to be able to provide care for all patients and remain solvent on the long term. The following is a SWOT analysis a hospital should be aware of when operating in NYC.

Strengths

New York City offers an abundant foot traffic to any hospital by the sheer volume of its large population 1. Mount Sinai Hospital for instance sees in a year approximately 158,916 admissions; services 3,400,000 outpatient visits, with an additional 574,175 Emergency Department visits, and delivers 16,630 babies (Mount Sinai, 2018).

The city also has a gigantic budget for directly and indirectly health related matters. The total budget adopted in 2017 was $140.1 billion. The Department of Health and Mental Hygiene, alone was allocated $12.1 billion, Health and Hospitals Corp was given $3.5 billion, and several other departments that work on enhancing the social determinants of New Yorkers received $125.26 billion, collectively. NYC dedicates an outstanding $10.9 billion for homeless services and $2.7 billion for the aging (The City of New York, 2018).

NYC Budget for Health

The variety of departments displayed above, in addition to a robust Police Department and Fire Department, shows that NYC takes seriously the collective of communities that make up the social fabric of the city. It is also a testament to a strong sense of community and care.

Weaknesses

Some of NYC’s strengths can also be its weaknesses. It is a large city, with a lot of people and some extreme difference, which can be hard to manage. A hospital faces those same challenges. Diversity, for instance, is a source of richness in any community. It brings with it a vast pool of skills, perspectives, and contributions. However, for Hospitals diversity also means different expectations and challenges. A hospital in NYC has to serve an untold number of patients that do not speak English. Native English speaking people are at least 67.5%, both whites only and African Americans only (U.S. Census Bureau, 2018). However, there is potentially at least 20% of New Yorker, which is approximately 2 million people 2. Hospitals have to spend time and money on educating staff on cultural issues, providing translation services, and providing meals that respect several dietary conditions. To use Mount Sinai’s statistics as an example, 20% of their admissions represents 27,306 admissions. It also means 680,000 Outpatient services and more than 114,000 ED visits.

A hospital’s weaknesses include lack of teamwork that is built around a culture of interprofessional and ethical collaboration (Ewashen, McInnis-Perry, & Murphy, 2013). Having the best talent in each profession that does not work well with each other, understands each other’s role, and works for a common purpose is a big weakness. The Committee on the Quality of Health Care in America recommended that all health care organizations should pursue six major aims to make care delivery safe, effective, patient-centered, timely, efficient, and equitable (Teitelbaum, & Wilensky, 2009).

Adequate staffing or lack thereof is also a source of concern. Empowering and listening to all staff in a collaborative fashion demands a lot of diligent work in order to face with success the demands and pressures of delivering quality care.

Opportunities

A hospital in New York City has many opportunities and many hospitals have capitalized on that. Health Care Systems evolved over the years, and when PPACA, required forming Accountable Care Organizations (ACOs), the hospitals in NYC had several options to choose from them.

The abundance of population in the city and its surroundings also offer big room for growth for hospitals that think through their processes, figure out their strategy around quality and finances, and implement their plans in a methodical way.

Hospitals in NYC also have the opportunity to contribute to the national debate of health care reform because they are mini labs of sorts where theories can be tested and data can be analyzed to draw lessons. Participating in the discussion also gives NYC hospitals front row seats in discovering new revenue streams that stem from either increase in revenue or decrease in expenses.

Threats

In order for a NYC hospital to provide care for their patient population (refer to statistics above under Strengths), they need to maintain a massive payroll. Mount Sinai Hospital, for example, employs more than 7,400 physicians 3, more than 2,000 residents and clinical fellows, more than 39,000 employees. The hospital also operates in 300 community locations, manages 7 different hospitals, and 13 freestanding joint venture centers. The complexity of human resource management can pose a real threat to a hospital. The threat can affect the quality of care, the revenue streams, or outright the existence of a hospital.

In fact, St Vincent Hospital in Manhattan, once one of New York City’s longest standing hospitals, closed on April 30, 2010. With the rise of uninsured population and the rise of medical care cost, St Vincent, like many other hospitals, surrendered to its demise. It is a shame considering it was the hospital that stepped up in times of national hardship to serve as the major site for triage for the 9/11 World Trade Center survivors and in past times was the receiving hospital for survivors of the Titanic in 1912. The hospital was under insurmountable debt that surpassed $1 billion (Zheng, & Frishman, 2012).

Stakeholders

There are three distinct groups of stakeholders in a hospital environment. Two groups are the patients and hospital staff. A third group can be rolled up under the third party of healthcare delivery. Each group of stakeholders include subcategories. The patients group include individuals who need care, their immediate families that have legal rights of access to patients care 4, and in some cases support staff for the disabled or elderly. The requirements of PPACA around quality of care and patient satisfaction dictate that hospitals have to device processes and policy around including families and support system in the care of patients. This expands the scope of the effort to solicit patient buy-in around building a patient-centered and satisfactory care. In the case of support staff, HIPAA is not necessarily clear on how much access they can have if any. A patient – who cannot speak, hear, or communicate – requires the assistance of a social worker or a home attendant. Hospitals need to be prepared to know if the assistants are qualified to make medical decisions for the patients. Can they even have access legally to medical information without breaching HIPAA rules? If they cannot, how do providers deliver care? What is the cost associated with those cases either in terms of lost revenue if hospitals have to turn away such patients, or in terms of expenses if staff should spend time to figure out how to care for a patient without the presence of their assistant?

The second group of stakeholders are the hospital staff. The group is comprised of medical staff, administrative staff, and professionals. The medical staff includes doctors with different specialties, nurses with different designations, technicians with different specialties and designations, therapists, and assistants. The administrative staff is the leadership of the hospital comprised of a Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer and many other officers that oversee different divisions and departments. Administration also include board members who have the duties to keep check on the leadership, the decision-making and strategic vision of the hospital. Finally, professionals are individuals with a wide range of talent that work on environmental services, food services, billing, coding, patient access, and data analysis among other duties.

The third group the paper refers to as third party of health care delivery are all the payors, vendors, consultants, and recruiting agencies that a hospital deals with to provide different levels of services in the continuum of care.

All these stakeholders are necessary to a successful operation. Managing them as individuals and managing the dynamics between them all is not an easy endeavor. Hospitals should not take that for granted. The author observed that more often than not healthcare organization do take their stakeholders for granted, and make no effort to build a strategy that understands the big picture. Leadership spends its time and effort putting out fires as they occur. The situation is made worse when certain leaders fail to train and empower their teams to make decisions.

Impact of Policy on Community Health

People in America do not truly understand that PPACA or Obamacare was not merely about covering more people or reducing health care cost only. This is due, mainly, to the barrage of misinformation republicans put out there in their effort to derail the reform, and to the poor job President Obama and democrats did (and still do) explaining to people that the reform is about extending coverage and access, and it is about improving outcome. The genius of the law is that it tied them all together. Hospitals in the past had to increase volume if they wanted more revenue. In this new era, hospitals have to increase efficiency, not necessarily or just volume, enhance outcome, and manage population health.

Medicare started the Medicare Hospital Readmission Reduction Program (MRRP) that penalized hospitals for readmissions within 30 days. Hospitals contested that MRRP should not put the entire burden on hospitals alone. However, the policy has de facto forced hospitals to forge relationship with community health centers, primary care providers, social workers, home nurses, and many others to make sure patients continue to get their care post discharge to avoid having them come back to an emergency department or be readmitted within 30 days of discharge. Patients also play an important role in making sure the work succeeds (Boccuti, & Casillas, 2015).

In New York City and in New York State the policy makers have made it abundantly clear that they want hospitals to care for all patients regardless of their ability to pay. While EMTALA is specific to Emergency Department visits, the state of New York wants hospitals to have a clearly defined and well-publicized charity care policy so patients who fall under certain Federal Poverty guidelines receive care for a discount (NY Health Access, 2018). NYC takes the Charity Care mandate a step further. The city builds on the state ruling not to consider immigration status when qualifying a patient for Charity Care (NY Health Access, 2018) to include language that assures New Yorkers that not only their immigration status is not a factor in the decision, it will not be shared with immigration authorities. In fact the City gives immigrants, regardless of status, not just access to Charity Care coverage but to insurance coverage altogether (NYC Human resources Administration, 2018).

These policies and statutes combined do increase the challenge that hospitals face in their day-to-day operations. They, however, create a completely new pool of patients that did not have coverage before. The earnest in on hospitals to understand what all of this means, and to align their strategy with improving processes, reducing waste, and pursuing new opportunities.

Strategy to Improve Success

So far, the paper has described the ever-so evasive issue of uninsured citizens, the demographics in one of the most active cities in the country, and the impact of policy on healthcare delivery to the uninsured and on hospital operations in general. The question, then, is how should a hospital deal in this environment?

The task can be daunting. Fear of failure usually becomes a self-fulfilling prophecy. Leaders are humans after all, and so they react to a perceived or feared failure by keeping a distance from projects (Porter-O’Grady, 2013). This is why meetings are not held regularly, and if they are, there is no substance.

It all starts with leadership. They have to take a step back from their demanding day-to-day workloads and meet regularly to assess the organization, creating or reassessing a strategic committee, and devising a strategic plan. The strategic plan should tackle the organizational operations and finances in the light of the new policies. It should think, also, about the burden of uncompensated care to figure out how to provide care for the uninsured and how to avoid losing sight of its impact on the bottom line. The head of the organization serves it best if she thinks about her leadership style. Servant leadership is one that can help bring the leadership team together in a collaborative fashion (Trastek, Hamilton, & Niles, 2014). It also empowers them and optimizes their input and commitment. Transformational leadership positively influences a patient safety culture (McFadden, Henagan, & Gowen, 2009).

When leadership meets regularly to perform research, discuss results, and make sure everyone is on the same page, they tend to carry that atmosphere with them to their respective teams. Meetings and open discussion help an organization make sure all involved understand what they need to do, why they need to do it, and how they can do it. Meetings are also a great exercise in communication. The leader needs to communicate the vision clearly, and different heads of departments receive good guidance and first-hand experience on how they should communicate with their divisions.

A collaborative, open-minded, well-communicated strategy is very effective. Effectiveness is paramount to a successful operation and is heavily dependent upon being successful in survival and growth, meeting objectives, and controlling and keeping direction.

The Uninsured and Profitability

A hospital has done its due diligence, understands what the policy requirements are, understand how the uninsured fit in its case mix of patients, and has put together a strategic team to tackle among many other things providing care for the uninsured. One aspect that is extremely important to research is how that hospital’s uninsured reality affects the bottom line.

It is very important for hospitals to be clear that uninsured and uncompensated care are not synonyms. Instead of lamenting their fate, hospital leaders need to quantify their uninsured population, run a cost analysis, and determine how they can make up for the gap.

To use Mount Sinai numbers as an example, 20% uninsured would mean a similar hospital sees 680,000 outpatient visits, 31,783 admissions, 114,835 ED visits, and deliver 3,326 that have no insurance. They represent potential financial loss for the organization. The example is hypothetical, it assumes NYC’s 20% uninsured rate, applies the same way across all those categories. The reality is there is no direct correlation and Mount Sinai might have only 10% uninsured encounters and it may have 40%. It is the role of every hospital’s leadership to understand their numbers, fully. However, the example would still illustrate the point of the many financial considerations the leadership has to grapple with. Each encounter cost the hospital $100 in an ideal world. In fact, even at $100 per encounter, the volume yields astronomical cost totals. The cost would look like this:

Cost by Visit

The hospital would incur close to $415 million dollars a year. A break even analysis that does not take into account the uninsured would suggest that the hospital has to make $100 in revenue to offset the cost. If everything worked perfectly and the hospital profit goal were 5%, then it would need to make $105 per encounter to break even. The Revenue to cost comparison by the visit type would look like this:

Rev to Cost by Visit

In a perfect world, the hospital is doing great. However, the uninsured, and frankly the denials, the self-pay balances that remain uncollected also change the picture. The following table will demonstrate only what the numbers look like if 20% of all encounters are not paid because patients have no coverage and no means to pay.

Cot per insured visit

This means the hospital has to make $125 per insured visit to break even. However, if the hospital wants to achieve the same amount of revenue that accounted for 5% profit, or $600,274,555, then they have to cash in $181 per insured visit.

Rev by Visit

The idea should be clear, that without accounting for the impact of uninsured (or all other revenue loss) puts hospitals at a great disadvantage. In this case, this hospital has to make almost 81% profit on its insured population to make up for the lost revenue due to uninsured visits and maintain a 5% profit overall. Fortunately, there are ways to do this, and it all starts with first understanding the impact, analyzing evidence-based data, and communicating the results to key players. The scope of this paper does not allow for an expansive explanation of how hospitals can recoup the lost revenue. However, a short list of solutions include government subsidies for Charity Care (NY Department of Health, 2018), Medicaid Disproportionate Share Hospital (DSH) (Medicaid, 2018), and contract negotiations. The latter has a lot of wiggle room where hospitals can negotiate with private insurers in a mutually agreeable fashion rates that can help mitigate some of this loss. Commercial insurances would pay deficit left and they have a stake in helping hospitals because they need providers to take care of their members.

Leadership Accountability

All this work, tenuous and complicated, is what hospitals deal with every day. Leaders come to work with one goal in mind making their hospital successful. If the attitudes were right, the leadership style were adequate, employee satisfaction were soaring, and patients received the care they need, it still will not work automatically. The effort has to be sustainable and sustained. One way that can help with that is adopting a leadership accountability culture. The word accountability is loaded, but the culture does not have to be punitive, just constructive. Leaders do not have to be solely accountable to their superiors or the board, but to their subordinates, and themselves. The tools that facilitate accountability in a positive light is Key Performance Indicators (KPIs) and reporting. A hospital has to digitize their processes, not just their medical records. Harvard Innovation Labs (2014) put a big emphasis on the impact of electronic processes reducing waste, medical errors, and increasing revenue. A panel of experts discussed the opportunities and challenges of digital health and collaborations.

Measures help everybody keep track of the direction the organization is headed. It keeps leaders accountable in the sense they are constantly trying to improve the metrics. It gives everybody a feel of how well they are all doing or how much is still left to do.

Conclusion

Health Care reform has eluded policymakers and several presidents over the past seven decades. The last time, before President Obama’s signature legislation known as Patients Protection and affordable Care Act (PPACA), an attempt at expanding coverage was made was 1965 when President Johnson signed Medicare into law. Both presidents took bold moves, which underlines the need for strong leadership to lead the way. The difference between the two presidents, however, is that Obama devised a mutli-pronged frame for reform that tries simultaneously to tackle quality of care, cost containment, and expansion of access with an emphasis of covering more people and caring for those who remain uninsured.

The uninsured, despite all political commotion and divergence of opinion, are American citizens and humans who cannot be left without health care. The latter is a necessity, and at times a life or death matter, and is not a luxury that can stand fancy rationalizations or excuses. Hospitals have the duty to provide care to whoever comes their way. The outcome does not have to be denial of care or uncompensated care. It does not have to be if hospitals leadership takes the time to figure out solutions. The nation has the moral duty to leave no one behind, and the reform Obama signed into law, albeit imperfect, is a huge leap forward that the United States of America has to build on to bring it to the next level.

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Footnotes
1 While US Census Bureau reports approximately 9 million people live in the five boroughs of New York City, many millions more of people live in the surrounding are commonly referred to as New York Metropolitan. From those a few million people work in NYC, and a few million more people visit the city as tourist. Time restraint did not allow for a deep search on exact numbers. However, the principle remains that many millions beyond the census 9 million New Yorkers would potentially need health care. The tourists rarely have the extra cash to pay for an ED visit or a hospital stay in New York City.
2 Many of the Hispanic Only, Asian Only, and other ethnic groups speak English. The 20% is an estimate down from the 37.5% of New Yorkers that the U.S. Census bureau reports are not Whites only or Blacks only.
3 Mount Sinai Hospital updated their Facts and Figures page the week of December 3rd, 2018, and their numbers increased drastically. Their physician count went up from 6,500 to 7,400. Their employees count went up from more than 39,000 to more than 42,000. Their patients’ statistics also went up. Admissions jumped by almost 22,000 admissions in a year from 136,000+ to 158,000+.
4 Parents have had the right to attend to the care of minors even before patient-centered care became a thing. In most cases, spouses were also involved in the care of their loved ones.

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