Obamacare gives Cook County Health a financial boost

July 08--The Affordable Care Act has provided a booster shot to the Cook County Health and Hospitals System, what county officials hope is the beginning of the road to financial well-being.

The public health system's revenue, including Cook County tax dollars, exceeded expenses by $14.1 million, according to audited financial statements for the year ended Nov. 30.

That's not much income for a system with nearly $1.5 billion in revenue in fiscal 2014, but it was a landmark year. The cash-strapped organization has been a drain on Cook County and its taxpayers for years.

Doug Elwell, deputy chief executive officer of finance and strategy, said he couldn't remember the last time yearly revenues were greater than expenses. "We'd have to go back to the archives."

Another achievement: For the first time, the county health care system had more insured patients than uninsured. That means the system was paid for a majority of the care it provided last year.

The positive results are the product of the county's new insurance plan for Medicaid recipients that has brought in a significant amount of federal dollars and some much needed stability to the public health system.

The health plan, called CountyCare, also has brought an influx of new patients. With about 180,000 members, CountyCare is the second-largest Medicaid managed care program in the Chicago area, according to the Illinois Department of Healthcare and Family Services.

But like a new business experiencing the first taste of success, the health system is confronted with challenges. The cost of patient care rose 46 percent last year, in part because the system cared for a lot of new patients that had untreated chronic conditions.

Health officials acknowledge that the system's long-term fiscal health will depend on how well it controls costs while also investing in new equipment and facilities to improve the patient experience. The system spent $2.4 million, for example, on new beds at its two hospitals, Stroger and Provident.

"We have reason to smile a little bit," Elwell said. "But it's not a reason to rest on our laurels. We have lots of work to do."

One of the big projects is the creation of a call center and centralized scheduling system, a response to one of the biggest patient complaints: calls that aren't answered or returned in a timely fashion.

The introduction of CountyCare also has afforded county officials the opportunity to make ambitious plans. On the drawing board is a massive redevelopment of the Stroger medical campus that would create a new outpatient center and physician offices and reuse of the historic Cook County Hospital building, vacant since 2002.

The Affordable Care Act, also known as Obamacare, has brought dramatic change to hospital systems nationwide. With millions newly insured either through exchanges or the expansion of Medicaid, the government insurance program for the poor, the number of uninsured admissions has declined and saved hospitals hundreds of millions of dollars in charity care.

But there is still much financial uncertainty in the industry. The health care law has pushed hospitals away from the traditional fee-for-service payment system, in which doctors and hospitals generally are paid for each test and procedure they perform.

Hospitals are now rewarded for limiting the volume of patients who are re-admitted and avoiding unnecessary tests and procedures.

The Cook County health system, one of the largest public hospital systems in the nation, has long been the safety net for the low-income, uninsured population in the Chicago area. Because many patients can't pay for medical care, the system has had hundreds of millions in operating losses year after year. In addition to running two hospitals and 16 outpatient clinics, the system also serves the Cook County jail population and oversees the public health department.

In 2012, the county took the first steps toward shoring up its finances. At the time, an estimated 330,000 adults in Cook County were eligible for the ACA's Medicaid expansion. The health system launched a pilot program to get a jump-start in enrolling Medicaid recipients into a managed care plan.

Between February 2013 and February 2014, more than 82,000 adults signed up for CountyCare. The health system advertised the program in newspapers and on posters, held community outreach events and partnered with the Cook County Sheriff's Office to enroll inmates.

Also in 2014, the state began shifting its existing Medicaid recipients to managed care, boosting CountyCare's enrollment. As a result, 63.5 percent of county patients were insured last year, up from 45 percent before Obamacare, health officials said. The number of uninsured declined to 32.3 percent in the first four months of 2015, they added.

"This is a transformation for the organization," said Dr. John Jay Shannon, CEO of Cook County Health. "Our uncompensated care went from north of $500 million in 2013 to $340 million in 2014."

Many of the newly insured were already patients being treated by the health system without compensation. In the first year of the CountyCare pilot program, the health system received a net of $314.50 per member per month. Starting in 2014, the health system began receiving $632 per patient per month.

For all of fiscal 2014, revenue from CountyCare totaled $656 million, more than half of the system's operating revenue of $1.26 billion.

Because of the additional revenue from CountyCare, the system relied less on tax dollars. Its "non-operating" revenue, which includes property and cigarette taxes, decreased by $73.5 million from the prior year, to $227.7 million.

Excluding the revenue from taxes, the health system had an operating loss of $213.6 million. But the operating loss shrank by $180.7 million.

The improving financial picture has not gone unrecognized. Marti Smith, an official with National Nurses Organizing Committee, said starting the Medicaid pilot program was "visionary."

"We believe in public health systems," Smith said. "We're hoping that this move will secure them financially for years to come."

Her union last month reached a tentative agreement with Cook County Health on a five-year contract for more than 1,200 nurses. But increasing staffing and building capacity are necessary to serve the influx of patients, Smith said.

"It used to be that when you were poor you had to go to Cook County," Smith said. "Now if they don't get good care and timely care, they can go elsewhere."

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