Hospitals large and small in the region expressed disappointment but not outrage at the 2 percent reduction in Medicare money that will occur because of federal budget cuts.
Some said their preparation for lower payouts from federal health-care reform prepared them well for the “sequestration,” even though the two aren't related.
“We're certainly not happy with it,” said Teri Larsen, director of finance for the Methodist Health System, which could lose about $3 million in Medicare money. Nevertheless, she said, preparations begun two years ago will pay off in the ability to handle the cuts.
“Two years ago we did a lot of 'what if?' analysis,” Larsen said.
Sequestration refers to across-the-board cuts enacted Friday to the federal budget. The cuts were made in that indiscriminate way because President Barack Obama and Republicans and Democrats in Congress couldn't agree on specific cuts or tax increases.
Hospital officials spoke in generalities and said they intended to avoid employee layoffs. They said they would strive to deal with the cuts through attrition and by reducing expenditures on medical supplies, devices, drugs, office materials and other items.
Scott Wooten, chief financial officer for Alegent Creighton Health, said in a written statement that the 2 percent Medicare cut would result in an $8 million annual reduction for his hospital system.
“We have been actively working to prepare for the health-care reform and reimbursement reductions, (and) this only accelerates that work,” Wooten said.
From 25-bed hospitals such as Montgomery County Memorial Hospital in Red Oak, Iowa, to Omaha hospitals, cuts will have to be made.
If the reductions remain in effect for a year, the Red Oak hospital faces a reduction of about $250,000. David Jennings, a spokesman for that hospital, said it wasn't clear how those cuts would be made.
Academic medical institutions, of which Omaha has two, cited special burdens that they will endure as a result of the sequestration. Medical research money funded by the National Institutes of Health will be cut by more than 5 percent.
That's a blow to institutions such as the University of Nebraska Medical Center and Creighton University, said Dr. Don Frey, vice president of health sciences at Creighton. It means less money for potentially lifesaving science, he said.
Mark Bowen, UNMC government relations director, said his university has a $65 million NIH research portfolio. It's not clear, he said, whether the federal government will distribute fewer medical research grants or simply smaller ones.
Regardless, he said, scientists may have to do smaller projects, extend them over longer periods or take on different projects. He said he hoped research technicians wouldn't have to be cut in the process.
Funding of residency training for doctors just out of medical school also could see cuts because they are funded largely by Medicare. Administrators at both UNMC and the Creighton School of Medicine said they would strive to avoid reducing their numbers of resident physicians.
“But potentially, would we have to reduce the numbers that we train in those programs? We'll look at every option other than having to do that,” Frey said.
Creighton trains more than 200 resident physicians, most at the Creighton University Medical Center. UNMC trains about 495 resident physicians.
The across-the-board cuts call for Medicare payments to doctors, hospitals and other medical providers to be reduced by 2 percent for services provided beginning next month. Without further action by Congress, the cuts will result in $11 billion in reductions in Medicare payments to them.
The Association of American Medical Colleges said the sequestration will delay medical research and “exacerbate looming shortages of physicians and other health care providers.”
The organization called it a bad decision. “To continue to improve our nation's health and economic well-being, America needs more investment in medical research and the health care workforce, not less,” the association said.
Nebraska Medical Center officials said they planned no layoffs, especially since they laid off 38 employees and allowed 100 open positions to go unfilled several months ago. Stephanie Daubert, controller at the hospital, said the cut would result in a $3 million loss of Medicare reimbursements for her hospital.
Daubert said her institution will continue to generate a profit.
“I would say it could be worse,” she said. “It's not good. But we will deal with it just like we would deal with any of the other reimbursement mandates that come out of Washington.”
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