Phoebe Putney Memorial Hospital
ALBANY, Ga. — Sequestration is expected to have a significant impact on Phoebe Putney Health System over the next several years, with anticipated cuts of nearly $2 million a year in Medicare reimbursement.
The Balanced Control Act of 2011 mandated a 2 percent sequester of Medicare spending through 2021 in order to reduce the national deficit. The cuts went into effect on April 1.
As a result of the cuts, Phoebe is expected to lose $600,000 this year and close to $2 million annually from 2014 through 2017, with a $17 million impact anticipated over the next 10 years, said Kerry Loudermilk, the hospital’s chief financial officer, at a Phoebe board meeting Wednesday.
“Like many hospitals, Medicare payments make up a substantial portion of our revenue, so these cuts will have a dramatic impact not only on Phoebe but every hospital in our country,” said Joe Austin, chief operating officer of Phoebe Putney Health System. “You don’t have to look far to see the number of hospitals forced to close due to lack of resources caused by poor reimbursement, or at times, no reimbursement.
“Fortunately for our community, we have dedicated physicians and a strong leadership at Phoebe from the board of directors to our 3,800 employees who have planned for cuts and have positioned Phoebe to brace for the pending storm.”
Phoebe CEO Joel Wernick said at the meeting that there are things being done throughout the health system to prepare for the Medicare cuts, including consolidation of supply ordering, consolidation of services, and tweaking of efficiencies and employment management.
No layoffs are anticipated as a result of the reduction. Whether there will be any hiring or salary freezes is not yet clear, Wernick said.
The cuts are being instituted while the Patient Protection and Affordable Care Act is expected to soon bring more people into the patient base. Hospitals in Georgia have to face those challenges and not having a Medicaid expansion.
“This is sobering news and something we are having to deal with like the rest of the hospitals in the country,” Wernick said.
“... We hope Congress over time mitigates this, and we will tighten our belt. Our goal as an organization is to have little or no impact on our current work force.”
A recent report from Tripp Umach shows that Georgia is expected to lose 20,499 jobs by 2021 as a result of these cuts. In 2013 alone, 13,271 health care jobs are expected to be lost in the state, the report said.
By 2021, the loss of Medicare funding nationwide will be $16.4 billion, translating into 766,000 fewer jobs, the report said.