Healthcare Without a Net

The New York Times article referenced above clearly portrays the state of affairs at Grady that threatens to bring about its closure:

• One-third of the hospital’s patients are uninsured, many of them immigrants;

• Another third are Medicaid beneficiaries;

• Only eight percent of inpatients have private insurance;

• The hospital serves more that 850,000 outpatient and 30,000 inpatient visits per year;

• Grady is the only Level 1 trauma center in the northern half of the state;

• The hospital provides Atlanta’s only emergency ambulance services, but a full one-third of those ambulances should ideally be decommissioned for want of repair;

• Grady’s emergency department (ED), which admits on average more than 300 patients per day, has no electronic patient tracking system, and crowding has increased wait times for moving patients from the ED to intensive care to as much as 24 hours.

This litany of holes in the safety-net is neither exhaustive of Grady’s problems nor unique to this facility; Martin Luther King, Jr.-Harbor Hospital in Los Angeles County was forced to close within the last year.

Scar Tissue: The Impact of Safety-Net Closures

Last November, Grady’s politically appointed board acquiesced to dissolve itself and form a nonprofit corporation to manage its operations, hoping to attract multi-million dollar private donations aimed to financially resuscitate the hospital. But the running fiscal deficits for 10 of the last 11 years and the impact of restricted federal Medicaid policies mean that Grady’s survival is anything but assured.

If the hospital were to close, or even dramatically reduce or eliminate some services, other hospitals in proximity would be inundated with under- and uninsured patients. For comparison, Lutheran HealthCare System in Brooklyn, New York, which serves a patient base similar to Grady’s in Atlanta, provides care to a population of almost 350,000 consumers that would not otherwise receive services.

Were Grady to shut its doors, a range of effects would likely be felt in the Atlanta metropolitan area and surrounding counties, perhaps reaching as far as across the state.

Many patients, out of necessity, would be forced to seek care at facilities further from their homes and workplaces. For many low-income patients, a compulsory change in venue would represent a strain on both their time and money.

Statistically, under- and uninsured patient populations tend to overuse EDs for primary care. A 2008 study conducted by Cambridge Health Alliance and Harvard Medical School found that ED wait times increased 36 percent—from a median of 22 to 30 minutes—between 1997 and 2004. The study also cited external data showing that total U.S. visits to EDs between 1994 and 2004 increased 26 percent, while the number of EDs decreased by 12 percent. A stream of new ED patients to surrounding hospitals would dilute the quality of care for both the migrating population and the existing patient base, straining hospital resources.

Other patients—out of a different set of necessities, ignorance, or fear—may forego or postpone basic medical care. In the worst case scenario, such gambles might increase mortality risk. Short of that, medical conditions aggravated over time are likely to cost patients more to treat down the line. The response from hospitals, based on a new patient mix already unable to pay for private insurance, will have to be an increase in charity care allocations or an upswing in bad debt will almost certainly follow. Both healthcare creditors and collection agencies are well aware that the most vulnerable populations are unlikely to meet their debt obligations. To offset expenses associated with bad debt, hospitals may have to increase charges to insurers, which in turn will pass those increases on to consumers through higher premiums and greater patient portion responsibility for the cost of care. Some of those consumers, burdened by higher medical expenses and a stagnant economy, will ultimately find themselves in a collections stream, even as they count themselves among the insured in America.

The potential impact of a Grady closure—or other safety-net providers like it—might very well prove injurious to doctors and nurses on the front lines, hospital creditors that finance their services, healthcare consumers from various patient demographics, and ARM companies that are employed by the healthcare industry as a last line of defense against uncollected receivables. The degradation of America’s safety-net may wind up ensnaring more groups than it was ever designed to save.

As an analyst at Kaulkin Media, Michael conducts custom research projects and writes publications focusing on the healthcare sector of the accounts receivable management industry. Contact Michael by email or at 240-499-3836.