Grady and the Role of Safety-Net Hospitals
By David Martin, President and CEO of VeinInnovations
Happy New Year! As 2013 kicks off, I’m sharing the final three clips from my interview with Matt Gove. In the above clip, Matt and I discuss Grady Memorial Hospital and the integral role the hospital plays in the Atlanta health care system.
Matt is a “refuge from real estate,” and began his career in health care at Grady as the senior vice president of marketing and external affairs. “I didn’t know anything about Grady before I got there. Other than I’m an Atlanta native so I knew of it … I did not know at the time how critical Grady was to the health care system in Atlanta,” said Matt.
Grady is a safety-net hospital, one of the largest in the nation. A safety-net hospital provides a substantial level of care to low-income, uninsured and vulnerable populations. Some safety-net hospitals are publicly owned and operated by state and local governments, while some are non-profits. Regardless of ownership or governance, safety-net hospitals are defined by a commitment to providing access to care for those with limited access (or no access) to health care whether due to insurance status, financial circumstances or health condition.
Grady is staffed by doctors from Emory University and Morehouse schools of medicine. The hospital provides care to Georgians in need, and maintains the premier level 1 trauma center within 100 miles of metro Atlanta. Grady’s emergency services include asthma, burn, sickle cell and stroke care. The hospital opened in 1892, and was created by (and named for) Henry W. Grady, editor of the Atlanta Constitution. Since its founding, the hospital has remained committed to the care of Atlanta’s poor.
In 2008, Grady faced massive challenges and made national headlines. The hospital owed $71 million to Emory and Morehouse, and Grady officials estimated they needed $366 million to meet neglected needs like new beds, computers, and medical equipment.
The hospital switched to non-profit governance (a moved first suggested by the Metro Atlanta Chamber of Commerce) in order to receive government, business and philanthropic funding. By 2010, the capital campaign for Grady had raised $306 million of the $325 million needed. “I think they’ve done a great job of getting over the big hump, getting the non-profit in place to operate the system that allows it to have a different relationship with its government sponsors,” said Matt.
Challenges lay ahead for Grady and safety-net hospitals across the country. “The government payers are going to continue to squeeze Grady, we know that – everybody thinks that the Affordable Care Act is going to be some magical boon to people like Grady that subsist on Medicaid dollars – it’s not. And they know that. They’re smart enough to know that,” said Matt.
Disproportionate share payments are provided to hospitals that provide care for a disproportionately large number of patients who cannot pay for some or of their care. The hospital must absorb the loss incurred by treating those patients. To help defray those costs, the federal government provides subsidies in the form of Disproportionate Share Hospital (DSH) payments.
The Affordable Care Act aims to dramatically increase the number of insured Americans. In 2014, state and federally run health care exchanges will be online. The intention of the exchanges is to provide a competitive market for citizens to comparison shop insurance plans for themselves and their families. The Supreme Court’s 2012 decision to uphold the requirement that every American be insured or face a penalty (starting in 2014) is hoped to further the ACA’s goal of raising the number of insured Americans.
So, the federal government is counting on fewer uninsured patients. Starting in 2014, DSH payments will be cut in half over a five-year period. Safety-net hospitals are preparing for the cuts. States that have chosen not to expand Medicare and Medicaid programs will still face DSH cuts from the federal government, and those cuts may cost hospitals.
Governor Nathan Deal has said that Georgia will not expand Medicaid, stating that the state could not afford it. Deal has also expressed doubt that the federal government, already in debt, will hold up their end of the bargain. (Under the ACA, the federal government will be responsible for 100 percent of the costs of newly eligible Medicaid enrollees for the first several years, and will later drop their coverage to 90 percent of the cost.)
“…Nobody in the city at this point ignores how critical they are to our system. And so I’m hoping that over the course of the next, I don’t know, half-decade as things become more real, people start to see how it shakes out, the disproportionate share money begins to dwindle (because Grady lives a great deal on that as well) that the community will be able to come together and make sure that a resource like Grady doesn’t go away,” said Matt.
Please watch a related clip on YouTube! We discuss the creation of more efficient contexts for health care through mergers and expansion. Piedmont and WellStar recently announced a partnership of their own. You can watch our conversation here.