Fri May 4, 2012
Web-only: Health care economist discusses financial issues facing Illinois hospitals
Illinois hospitals are bracing for Medicaid reimbursement rate cuts at the state level. This issue entered the spotlight after a Rockford-area health-care provider announced budget cuts. NIU's Jim Ciesla says other hospitals could take similar steps amid uncertainty over state and federal policy matters.
Click on audio link to hear the full interview
The Illinois Hospital Association estimates that 1 in 3 Illinois hospitals are operating in the red. But Ciesla says they're in better shape than other states. He says while Medicaid reimbursements to Illinois hospitals have slowed in recent years, they "have a history of being more generous than other states."
When it comes to profit margins, he says both non-profit and for-profit systems need to have some extra revenue at the end of the day to reinvest in their facilities and equipment. But, he says non-profits "need to be particularly careful not to allow that money to accumulate." He says they're required to redirect those funds back into the community when it comes to health enhancing services.
Ciesla says there is evidence in Illinois of health-care systems overextending themselves when it comes investing in areas such as specialty care. He says that can create redundancy in certain markets. He says companies sometimes try to remedy the problem by merging with other providers.
As for the effect of the current fiscal environment, Ciesla guesses that hospital systems will take a wait and see approach in terms of investment while health-care issues play out in Springfield and in Washington D.C. He also says more hospital systems could soon make budget announcements, which may include job cuts.
A glance at finances for selected northern Illinois hospitals
Each link is the most recent annual report from each hospital