Forecast 2008 : Health Care

In 2008, hospitals across the nation will continue to suffer from bad debt and the costs of charity care. But charity care—resulting from uninsured individuals who come through hospital doors seeking treatment—is a particularly expensive proposition for Tennessee hospitals. That's because Tennessee is one of only two states that does not have a permanent Medicaid disproportionate share hospital (DSH) payment to help offset the costs that providers incur caring for charity patients.

Craig Becker, executive director of the Tennessee Hospital Association, says Tennessee forfeited its share of federal money in the 1990s when it created TennCare.

"The thinking was that TennCare would eliminate charity care, but that didn't happen," Becker says. As a result, Becker says that like last year, THA's number one issue in 2008 is to secure a permanent DSH payment for the state. Tennessee hospitals, he says, paid about $700 million in charity care in 2006, representing about a 43% increase from the $480 million incurred in 2005. "If you throw in the unreimbursed care delivered to TennCare patients, the total is $1.3 billion in 2006, compared to $1.2 billion in 2005," Becker says.

In 2006, an amendment to the Health and Tax Extenders bill provided a one-time DSH payment that yielded $30 million in fiscal year 2007-2008 to help pay charity care costs. And while Tennessee hospitals receive about $100 million in essential access payments from the federal government and the state, Becker says that's just not enough. "Other states receive DSH payments of about $450 million," he says.

In October, President Bush vetoed a State Children's Health Insurance Program (SCHIP) bill that contained a provision that would have given Tennessee hospitals a $30 million-a-year DSH payment for five years. If the measure had passed, the state would also have contributed about $20 million. So, now, the THA is back at it.

"We're trying to get it attached to the Medicare bill or to one of the SCHIP bills going forward," Becker says. "We'll keep trying until we put it on one that the President will sign." And the $30 million request is just a placeholder, Becker says. "We can go back for more later," he says.

In the meantime, one way to reduce charity care costs involves educating patients. Gary Newsome, president of division III operations (which includes Tennessee hospitals) at Community Health Systems, says it is important to teach patients not only about health care issues, but also about the correct place to go when they need medical attention. "Hospital emergency rooms are not the best places to seek health care consults," Newsome says. "There are other lower cost alternatives, such as urgent care centers." Meanwhile, with the number of uninsured Americans expected to reach 50 million by the end of the year and U.S. health care costs climbing to about $2.9 trillion (according to the National Coalition on Health Care), health care reform will stay at the forefront of political debate. And although reform is brewing, Newsome says little will happen this year.

"Altering the health care system is like turning a Titanic," he says. "It's not anything you can turn on a dime."

Instead, it's an ongoing discussion marked by incremental changes and initiatives. And while some incremental changes may play out in 2008, it's unlikely that the nation, or the state, will see substantial health care changes anytime soon.

A Rx for the RN shortage

For decades, almost every discussion of health care industry challenges has included the phrase "nursing shortage," and even now maintaining a supply of qualified nurses represents a staffing challenge that hospitals across the nation face every day. And in Tennessee, another element of this topic has become even more pressing—a shortage of nurse faculty; a reality that's forcing schools to turn away prospective nursing students.

"We've done a good job of getting people interested [in nursing and other allied health fields], and now, there are not enough people willing to teach," says Craig Becker, executive director of the Tennessee Hospital Association.

According to the Tennessee Center for Nursing, 2,383 student applicants were turned away from Tennessee's nursing schools in 2006 because the state lacked the faculty to train them. In 2007, state health care officials raised $1.4 million for the Graduate Nursing Loan Forgiveness Program—which Gov. Phil Bredesen signed into law in 2006 to pay for 100 RNs to enroll in graduate programs in fall 2007. After earning graduate degrees, nurses in the scholarship program are expected to teach undergraduate nursing, and for every year they teach, 25% of their loan is forgiven.

In the past, Bredesen said he would earmark funds in future budgets to sustain the program. This year, program supporters have asked that the governor include $1.4 million in the upcoming budget to replenish the scholarship fund. Though $1.4 million may only be a drop in the state budgetary bucket, with the Tennessee Center for Nursing research predicting the need of 383 nurse faculty positions by 2010, that drop may quench a sizeable thirst among hospitals in the coming years.

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