There are significant issues currently being debated at state and national levels that present challenges to your health system's ability to continue to fulfill the promise of care to the residents of eastern North Carolina.
On the federal level, implementation of the Affordable Care Act (ACA) will cost North Carolina hospitals more than $7 billion over the next decade through the reductions in Medicare payments and support for the care of the poor. For Vidant Health, the cumulative impact of these cuts over the next 10 years exceeds $500 million. Over the next five years, we will see a 50 percent reduction in our net income, all of which is used to maintain the care of the people of this region.
The governor and the North Carolina state Senate have proposed reducing hospital Medicaid outpatient payment rates from 80 percent of the cost of care to 70 percent. This reduction would harm all of our hospitals, especially those located in rural communities, which typically provide more outpatient care, and serve more patients covered by Medicaid. Government programs pay for more than 70 percent of patients treated at Vidant Health hospitals and clinics, with rates below the cost of care.
The N.C. Senate is proposing a tax reform package that would have tremendous consequences on all hospitals in North Carolina, drastically increasing the taxes that Vidant Health pays over a four-year period. As a not-for-profit system that uses all of its revenue for the care of patients regardless of patient's ability to pay for care, Vidant Health does not pay corporate taxes and receives a reimbursement for the sales tax paid on supplies purchased for the care of patients. Vidant Health provided more than $159 million in unreimbursed care last year (including charity care, bad debt, Medicare). The proposed change in taxes could cost us 30 percent of our annual revenue, greatly reducing our ability to provide patient care, especially in rural areas.
State-operated alcohol and drug treatment centers, such as the Walter B. Jones Alcohol and Drug Abuse Treatment Center in Greenville, are also at risk of closure under the proposed budget. These patients have no other current options for care. Our hospitals are neither staffed nor equipped to assume the important and difficult care of these patients, which would then strain emergency departments.
Care for patients in behavioral health, obstetrics and diabetes education is now provided with reimbursement that is less than it costs to provide these services. These services may be cut to maintain other essential services offered to the community and keep the hospital and clinic doors open.
While our hospitals are in place to fulfill life-saving missions, we account for (directly and indirectly) 10 percent of jobs in North Carolina. More than one-half of all health care costs are staff.
Gov. Pat McCrory and members of the General Assembly have been elected to represent our interests as citizens of North Carolina. I encourage you to tell our elected officials how these laws affect your community hospitals' ability to provide quality care for everyone who walks in their doors.
(Dr. David Herman is CEO of Vidant Health, which provides care to more than 1.4 million people throughout eastern North Carolina. We are a system of 10 hospitals, over 50 physician practices, wellness centers, home health and hospice and more than 350 providers in 29 counties.
Vidant Health has more than 12,000 employees and, in 2010, contributed more than $2.4 billion to the gross regional product in eastern N.C.)