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$71 billion in Medicare cuts expected
If you think rehab hospital officials have been grumbling about the Balanced Budget Act of 1997 (BBA) the past few months, you’re right. But if you think they have no reason to grumble, you’re wrong, according to two recently released studies from the American Hospital Association (AHA) and American Physical Therapy Associa tion (APTA).
The BBA is projected to cut billions of dollars in hospital revenue, and unemployment among physical therapists practicing in facilities already operating under prospective payment has increased.
A study conducted for the AHA in Chicago finds that the BBA is projected to cut $71 billion in Medicare payments to hospitals, which may cause seven of 10 hospitals to have negative total Medicare margins within three years. The study concludes that for all hospitals, total Medicare margins are projected to be between -4.4% and -7.8% in 2002.
Both rural and urban hospitals will feel the brunt of that decline, the AHA study reports. Rural hospitals’ total Medicare margins may drop to between -10.4% and -7.0% in 2002 as a result of BBA payment cuts, while urban hospitals’ total Medicare margins in three years are predicted to range from -7.3% to -3.9%.
Some communities could lose services
In just one year, margins for hospital-based home health services are predicted to drop from -4.0% in 2000 to -11.6% in 2001, the study concludes. Medicare outpatient margins are estimated to drop to -28.8% if costs increase at their historical rate of growth or -0.3% if hospital costs increase more slowly.
"Hospitals don’t want to compromise on quality or worker protections, but communities should be concerned that all of the types of services previously available may not be any longer," AHA president Dick Davidson said in a prepared statement.
Health care practitioners in skilled nursing facilities and home health care already are feeling the brunt of the BBA’s impact (see story, p. 81, on the BBA’s affect on home health agencies). A study released in mid-May from the Alexandria, VA-based APTA says that approximately 3% of therapists responding to its member survey indicate they are unemployed. The unemployment rate compares to a 1.2% unemployment rate reported in an October 1998 APTA survey.
More than half of the unemployed respondents in the most recent survey (53%) said they were practicing in a skilled nursing facility, APTA reports. In addition, 20.1% of the respondents said their number of hours worked had been reduced involuntarily.
According to the May survey, approximately 78.6% of physical therapists are employed full time, a 2% decline from the October 1998 survey.
(Editor’s note: For a full copy of the Lewin Group study, visit AHA’s Web site at www.aha.org.)