As we complete the second quarter of the year, there are many exciting opportunities and challenges that continue to shape our environment. Investigators are breaking down longstanding barriers to the most complex medical problems, patients are benefiting from the application of bold new technologies, and advanced computer systems are making hospitals safer every day. At the same time, however, labor shortages are beginning to impact hospitals all over the nation, hospital margins continue to shrink and the financial pressures placed upon the system continue to reach new levels. What has been our response?
Last year Partners developed a payer strategy designed to improve the margins of hospitals within the system by negotiating fair reimbursement levels. This critical strategy was designed to eradicate losses on managed care contracts, while fighting at the state and national level for both Medicaid and Medicare rate relief.
In 1999 alone, Partners hospitals lost more than $70 million on managed care contracts with the three major payers who control 80% of the market. Meanwhile Partners hospitals provided care for more than 65,000 Medicaid patients and lost $45 million doing so.
But our strategy is paying off. After prolonged negotiations, the system was able to negotiate improved reimbursement rates with both Blue Cross/Blue Shield and Tufts Health Plan that are fair for hospitals and physicians alike. At the same time, we fought for and won partial relief from the Balanced Budget Act amendments that had so devastated hospitals across the country by depressing Medicare reimbursement levels.
On the state front, we continue to be engaged in conversations with the Governor’s office and legislative leaders on the need to revise the payment structure for Medicaid patients. Reimbursements that don’t cover the cost of care jeopardize our mission of providing the highest quality medical care, teaching the physicians of the future, discovering new medical treatments and cures, and providing well over $100 million in community benefits and care to the uninsured every year.
As we look beyond our own geographic boundaries, it is important to recognize that hospitals all over the country are encountering similar challenges. We can be proud of the work we have done at BWH and at Partners to assure our viability. Examples of extreme financial difficulties are too easy to cite, and we can be gratified that we have anticipated many of the challenges we now face and have implemented a strategy to carry us forward.
In view of our increasing patient volume, we also remain capacity constrained and face great challenges everyday trying to expedite patient flow through the hospital. Transferring some of our less resource intensive patient care to the Falkner Hospital has helped both institutions, and we anticipate additional efforts, such as the opening of the 11C ICU, to alleviate some of this pressure. In upcoming issues of PSU, we will share with you initiatives to reduce length of stay and other measures designed to increase capacity.
Chief Medical Officer