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Phoebe Putney Health System generates $1.2 billion for economy

Georgia hospitals contribute nearly $40 billion to state economy

A recent report from the Georgia Hospital Association says that Phoebe Putney Health System generated more than $1.2 billion for the Albany area and state economy in 2012. (Albany Herald file photo)

A recent report from the Georgia Hospital Association says that Phoebe Putney Health System generated more than $1.2 billion for the Albany area and state economy in 2012. (Albany Herald file photo)

ALBANY — In 2012, Phoebe Putney Health System generated more than $1.2 billion in revenue for the Albany area and state economy, a recent report by the Georgia Hospital Association showed.

The report also found that, during the same time period, Phoebe provided approximately $56.85 million in uncompensated care while sustaining more than 9,484 full-time jobs throughout Southwest Georgia and the rest of the state.

The report revealed that Phoebe had direct expenditures of more than $541.91 million in 2012. When combined with the an economic multiplier developed by the United States Department of Commerce’s Bureau of Economic Analysis, the total economic impact of those expenditures was $1.24 billion.

Georgia hospitals put nearly $40 billion into the state’s economy that year, the GHA said. The report also revealed that hospitals in the state employed more than 126,000 full- and part-time workers and indirectly created more than 287,000 full-time jobs in Georgia.

Officials say, despite their economic contributions, the state’s hospitals, especially those in rural areas, are facing unprecedented financial challenges. Since the beginning of 2013, four Georgia hospitals have closed, a fifth recently announced plans to close and others are struggling. The 2012 Georgia Department of Community Health Hospital Financial Survey revealed that 60 percent of rural hospitals lost money in 2012, while 42 percent of all hospitals had negative margins.

A big strain on hospital finances continues to be the growth of uncompensated care, while Georgia has opted to not expand Medicaid. The GHA study says Georgia hospitals provided more than $1.6 billion in unpaid care, an increase of about $60 million from 2011. Forty-five percent of all Georgia hospital patients are insured through either Medicare or Medicaid. In 2012, Medicare paid 96 percent of hospital costs, while Medicaid, the state and federal health insurance program for low-income families, paid Georgia hospitals 87 percent of costs, GHA said.

While commercial health insurance has traditionally made up for shortfalls in payments from other sources, GHA officials say changing insurance market dynamics are making that increasingly difficult. Many Georgians with private health insurance, including many of those in the Affordable Care Act health insurance exchanges, have significant annual deductibles that often go unpaid, leaving hospitals with no payment.

This impact is felt at Phoebe, which serves a region that traditionally has a higher population of Medicaid patients. Last October, there were 33 management level positions at Phoebe eliminated followed by a staff reduction of 127 positions — the latter of which was expected to reduce systemwide operating costs by $10 million in Fiscal Year 2014.

A few weeks prior to that, merit pay increases and uniform bonuses were cut for the fiscal year after the Phoebe Putney Memorial Hospital failed to meet its financial goals. In April 2013, officials at Phoebe announced that the hospital was expected to lose $2 million annually over the course of nine years due to Medicaid reimbursement reductions. The additional loss of funding caused by the implementation of ACA resulted in the re-evaluation of management positions and streamlining of the organization.

The employment multiplier considers the “ripple” effect of direct hospital expenditures on the economy such as medical supplies, durable medical equipment and pharmaceuticals.