Hospitals Brace for Sizable Medicare Cuts From Sequestration

Starting this Monday, April 1, hospitals and health systems across the country will start to see their Medicare reimbursements dwindle further, as sequestration will result in almost $10 billion of lost provider Medicare payments.

Congress failed to avert the across-the-board spending cuts, totaling $85 billion this federal fiscal year, which ends in October. Most hospitals have budgeted for these Medicare losses since the term "sequestration" floated into everyone's dictionary, but just how much are hospitals expecting to lose?

•    Health systems have projected eight-figure losses this year alone from sequestration. For example, Columbus-based OhioHealth expects to lose $12 million on $2.5 billion in revenue. Franklin, Tenn.-based Community Health Systems, the second-largest for-profit hospital chain in the country, expects sequestration will cut up to 0.8 percent of its net revenue this year — or roughly $104 million across its 135 acute-care hospitals.

•    Many large academic medical centers, most of which rely on large chunks of Medicare funds, are expecting to lose millions of dollars. According to the Association of American Medical Colleges, the average major teaching hospital will lose roughly $14 million in Medicare reimbursements. Milwaukee-based Froedtert Hospital and The Medical College of Wisconsin expects to lose $9 million in its next fiscal year, according to a Badger Herald report.

•    Parkland Memorial Hospital, one of the largest public hospitals in the Dallas area, expects to loss $2 million this year alone from sequestration, according to a Dallas Business Journal report.

•    Anderson, S.C.-based AnMed Health, a non-profit health system with 638 beds across several hospitals, plans to absorb almost $2.2 million in Medicare cuts for the rest of this calendar year, according to an Anderson Independent Mail report. Greenville (S.C.) Health System will lose roughly $2.8 million.

•    Small community hospitals will also feel the pinch in varying capacities. Oconee Medical Center, a 169-bed hospital based in Seneca, S.C., may lose up to $800,000 in Medicare reimbursement, according to the Independent Mail report.

•    Winneshiek Medical Center, a 25-bed critical access hospital in Decorah, Iowa, will lose roughly $300,000, but that total could stretch to $500,000 by the end of the year, according to a Decorah News report.

•    Sequestration has even forced some hospitals to close other services. Mt. Ascutney Hospital and Health Center, a 25-bed CAH based in Windsor, Vt., announced it will close its skilled nursing facility, effective Sept. 1. Hospital executives attributed the Medicare cuts as a major reason for the facility's closure.

More Articles on Hospitals and Sequestration:

5 Tips for Hospitals to Survive the Sequester
American Hospital Association: An Update of Healthcare Reform and the Political Climate
Was Sequestration the Best Option for Hospitals?

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