Alabama Hospitals Facing Financial Collapse, continued from page 1

state and national leaders to ensure the system avoids collapse.”

“A collapse of the system would have a ripple effect on the state’s economy as a whole,” said Joseph Marchant, CEO of Bibb Medical Center and chairman of the Alabama Hospital Association. “There is not one area of our state and local economic infrastructure that doesn’t depend on hospitals and other healthcare providers. In Bibb County, our hospital is one of the largest employers, and because of the hospital, our county has doctors, pharmacies, home health and other services. We also help attract new businesses, support existing ones and contribute substantially to the local tax base.”

HIGHLIGHTS FROM THE KAUFMAN HALL REPORT:

Operating margins for Alabama hospitals have decreased 79 percent in 2022 compared to pre-pandemic (2019) levels despite receiving federal financial support. Without that assistance the operating margins would have declined by more than 100 percent.

More than 50 percent of Alabama hospitals have negative operating margins, which has increased by 125 percent since 2019.

In 2022 Alabama hospitals lost $738 million from operations compared to 2019. Since the beginning of the pandemic, hospital income declined by almost $ 1.5 billion. Without federal funds, the lost income would have been more than $2.4 billion.

75 percent of the increased labor costs for Alabama hospitals were due to increases in pay and benefits for existing staff, including hazard pay, retention bonuses and other compensations. Approximately 25 percent of the increased labor costs were the result of significant increases charged by staffing agencies for contract labor during the pandemic.

Costs have increased by $443 million for Alabama hospitals for medication and supplies over the period.

Even though COVID has become less disruptive, hospital capacity remains a challenge due to greater patient acuity coupled with staffing shortages in both the acute and post-acute settings.

The net effect of these challenges is a continued worsening of the financial condition of Alabama hospitals with losses of income growing from $124 million in 2020 to $738 million in 2022 even with federal relief funds.

by steve spencer

In 2014, the Affordable Care Act offered to fund states’ Medicaid expansion with the federal government paying 100 percent of the costs for the first three years and 90 percent after 2020.

Alabama chose not to participate. Since then, 10 Alabama hospitals have closed. And today, the situation is worse: Alabama Hospitals lost $1.5 billion in the last two years. Without help, much of our state will soon be without healthcare coverage.

Under the Families First Coronavirus Response Act, states were prevented from removing people from Medicaid during the COVID emergency. This means about 200,000 Alabamians kept their Medicaid throughout the pandemic with the federal government paying large share of the costs. Even with this, Alabama hospitals were pummeled with catastrophic losses. How long can they survive when this program ends in March?

Opponents say accepting the government’s help with Medicaid expansion will cost too much. But will it? The Public Affairs Research Council of Alabama estimates that expanding Medicaid would cost an average of $225.4 million per year. However, expansion would result in the federal government paying $397.88 million in annual expenses currently paid by the state. As a result, the state could expand coverage, and at the same time, reduce the amount paid to support healthcare for Alabamians by $172 million annually.

Likewise, a study conducted by David Becker, PhD at UAB found that after netting out the state’s share of the coverage with estimated new state and local tax revenue, expansion would have a net-positive impact on Alabama’s overall budget. His study estimated that expansion would have an annual economic impact on the state of more than $2 billion.

Pie in the sky? Not if you look at the results of other states that have expanded Medicaid. Since joining the program, Arkansas with an economy similar to ours, has not lost a single rural hospital. Arkansas’ benefits don’t end there. $1.7 billion federal dollars flowed into the Arkansas economy in the first year alone. The state’s uninsured rate was cut in half. Arkansas hospitals had a 55 percent reduction in losses from uncompensated care. “Our Medicaid expansion has had tangible,