Modesto hospital would take financial hit from ACA repeal; job cuts are less certain

Feb. 03--After one study predicted 3,000 job losses in Stanislaus County from an Affordable Care Act repeal, local hospital executives were asked for their assessment.

Warren Kirk, chief executive officer of Doctors Medical Center of Modesto, agreed to discuss the potential impacts on Doctors and said a loss of funding from an ACA repeal won't necessarily translate into major job cuts at the Florida Avenue hospital.

The hospital will need staff members to care for an increasing number of patients, even though it won't get paid for many patients if certain ACA provisions are abolished and not replaced. Registered nurses are probably safe because the hospital has to comply with the state's mandatory nurse-to-patient ratios.

The hospital has an open-door policy for people regardless of their ability to pay and often accepts low-income patients transferred from other facilities. While some folks assume it's a public hospital, Doctors is a for-profit facility owned by Tenet Healthcare Corp. And anything that happens to Obamacare will affect this hospital.

Kirk said the ACA reduced reimbursements to hospitals but provided coverage for more people. Starting in fall 2013, almost 17,000 county residents used Obamacare subsidies to buy affordable insurance and around 65,000 were enrolled in the ACA's Medi-Cal expansion, which allowed childless adults to join the low-income health program.

For the Modesto hospital, the percentage of patients with no coverage dropped from 8 percent to 1 percent, Kirk said. In the past three years, the hospital has been reimbursed for thousands of patients who previously could pay nothing.

Doctors has picked up $14 million in annual Medi-Cal payments, helping to improve its bottom line.

"We still lose money on all of those patients. We just lose $14 million less than we did before," Kirk said.

Medi-Cal reimbursements are 20 percent of what employer-based insurance pays to hospitals for patient care. Health plans sold to consumers through Covered California, the ACA exchange in California, pay the hospital 10 percent less than what regular health insurance pays, Kirk said.

Doctors accepts the Obamacare plans of three insurers in Stanislaus County -- Blue Cross, Blue Shield and HealthNet. People choosing the Kaiser plans use the Kaiser Permanente hospital in Modesto. Memorial Medical Center participates in the Covered California Blue Shield preferred provider plan.

Doctors has not seen a large number of patients with Obamacare insurance. On average, 3 percent of the 353 patients in the hospital have an Obamacare health plan. A broader look at hospital data in the U.S. might shed light on claims that insurers are losing hundreds of millions of dollars providing Obamacare insurance.

Kirk suggested adults with ACA coverage are a more healthy group of consumers, compared with the extremely poor and elderly, who are frequent users of hospital services.

If the Medi-Cal expansion is defunded, Doctors will have exposure to financial losses in the post-Obamacare period. Visits to its emergency department continue to grow, hitting 107,000 last year, and many of those patients won't have Medi-Cal cards to pay for care.

A second financial blow would come if the Republican-led federal government does not reverse the hospital funding cuts in the ACA.

Kirk had no estimate on how many staff cuts would occur with an ACA repeal. It's safe to assume that Doctors and its investor-owned parent company would take a hard look at reducing costs, while maintaining the staff necessary for patient care.

Ken Carlson: 209-578-2321

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