Business

NC cuts worse than Obamacare, Pardee CEO says

By Bill Moss, Published: June 26, 2013

Pardee Hospital's CEO told the hospital Board of Directors on Wednesday that cuts by North Carolina leaders had done more to harm the county-owned hospital than the federal Affordable Care Act, which he suggested has shouldered the greater blame in the eyes of the public. Obamacare could cost Pardee $5.6 million a year, he said, while state cuts could chop the hospital's revenue by $8.2 million.

"There's been a lot of focus and a lot of anger over what's happening in Washington. What I think has been a little bit unnoticed is the state," Jay Kirby said during his regular CEO report, part of the monthly meeting of Pardee's governing Jay Kirby speaks to the Republican Men's Club earlier this year. [Lightning file photo]board. "The leadership in Raleigh voted not to expand Medicaid. It would have been $6.6 million in brand new money to help offset the federal cuts."
Specifically, he said, Medicare reimbursement cuts and sequestration — the automatic cuts that went into effect on April 1 — will cost Pardee $5.6 million a year.
State cuts already enacted or on the table could cost Pardee $8.2 million a year. Decisions that have hurt Pardee and other hospitals include the rejection by Gov. Pat McCrory and the Republican-led Legislature to expand Medicaid coverage (costing Pardee an estimated $6.6 million per year) and a pending proposal to cut nonprofits' sales tax exemption, which Kirby said would cost Pardee $1.4 million a year. Changes to the state workers compensation program would cost the hospital another $175,000, he said.
The tax reform bill that eliminates the sales tax exemption was drafted in the Senate and has McCrory's support. The House leadership opposes it, Kirby said.
"Do I think Sen. (Tom) Apodaca and Rep. (Chuck) McGrady want to harm Pardee specifically? No," he said. "I think they've got broader tasks ahead of them."

Kirby told the Pardee board that he had, as a member of the Henderson County Chamber of Commerce Board of Directors, asked for and received the chamber's support for a resolution opposing the state cuts.

The projected loss of state Medicaid money is based on calculations of potential revenue for Pardee had the state expanded coverage to roughly 500,000 poor and middle-income families. McCrory and leaders in the Legislature said they could not have expanded Medicaid until they fixed what they describe as problems with the state's Medicaid program.
Chairman Bill Moyer said the combination of reimbursement cuts from Obamacare and potential state cuts — a total of $13.8 million a year — could drive Pardee to a loss, in a year when it is showing revenue gains, patient census and outpatient visits ahead of projections and ahead of last year's numbers.
Finance Committee chairman Bill Smith reported that the hospital's total net operating margin was $3.6 million through the first two-thirds of the budget year, which is $1.46 million or 67 percent ahead of budget, or $3 million ahead of 2012. The year to date bottom line figure was $4.37 million, 34 percent ahead of budget and $2.5 million, or 140 percent, better than the same period a year ago.

Higher patient admissions, more surgeries, more visits to Pardee-owned physician practices and more urgent care visits  drove the gains, Smith said.