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Carolinas HealthCare System’s CEO says health care industry is target for cuts

As hospitals across North Carolina have closed or cut staff, Carolinas HealthCare System’s chief executive warned Tuesday that the state Senate’s proposed Medicaid cuts could jeopardize the financial viability of hospitals and impose burdens on some of the state’s most vulnerable citizens.

“The health care industry has become a high-profile target,” CEO Michael Tarwater said at the system’s quarterly board meeting. “We all agree that we need to find a way to provide health care that is lower cost. (But) I don’t think we can reform fast enough to keep up with the cuts that are coming.”

Tarwater’s assessment came as Chief Financial Officer Greg Gombar reported a first-quarter operating loss of $5 million on $1.1 billion total revenue for the system’s primary enterprise, which includes 12 hospitals plus other medical offices in the Charlotte region.

The loss was “not unexpected,” said Gombar, who in December had projected a net loss of revenue for 2014 for the primary enterprise, mostly because of deep cuts in government reimbursement for Medicare and Medicaid patients.

Carolinas HealthCare’s total system, including 40 hospitals across the Carolinas and Georgia, posted a positive operating margin of $8 million on total operating revenue of $2 billion for the first quarter of the year.

In warning of the effects of reimbursement changes, Tarwater cited the April 1 closing of a 49-bed hospital in Belhaven, operated by Greenville-based Vidant Health. Vidant officials attributed the move, in part, to Gov. Pat McCrory’s decision not to expand Medicaid under the federal Affordable Care Act.

Tarwater also referred to recent announcements of hospital staff reductions. Last year, Cone Health in Greensboro, now affiliated with Carolinas HealthCare, eliminated 300 positions. Recently, Wake Forest Baptist Medical Center announced plans to lay off 350 employees, and High Point Regional Health announced it will eliminate 115 positions. High Point officials cited a decline in inpatient volumes and reductions in reimbursements for treating patients covered by Medicare and Medicaid.

Joe Piemont, the system’s president, said there are no plans for layoffs in Carolinas HealthCare. But it does plan to cut about 20 jobs when it opens a $20 million, 15-bed hospital in Wadesboro next month. The new hospital will replace Anson Community Hospital and is intended to redesign how health care is delivered, with a focus on wellness and prevention.

Tarwater said he and other Carolinas HealthCare officials have spoken with state legislators about “the gravity of the decisions they are making.” He said the proposed Senate budget would reduce by 15,000 the number of disabled and low-income residents who qualify for the current Medicaid program.

In addition, he said the state’s decision to reject federal money to expand Medicaid under the Affordable Care Act has left about 500,000 residents without health insurance and contributed to the “jump in uncompensated care” reported by Carolinas HealthCare.

For the first quarter of 2014, the total of unpaid accounts and free care for low-income patients rose to $340 million for the Carolinas HealthCare primary enterprise. That is an increase of 14 percent over the same period last year.

Garloch: 704-358-5078
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