Healthcare Organizations: Think Differently When Responding to Medicaid Cuts

Health care | Prager Metis | Jun 05, 2020

The State of New York recently announced that Medicaid payments would be reduced 1.5 percent across the board. This applies not only to future services, but to all non-exempt services dating back to April 2, 2020. New York is not alone, however, as many states facing sudden drops in tax revenue are cutting their Medicaid programs, even as millions of jobless Americans continue to enroll.

Ohio experienced a drop-off of $866 million in tax revenue in April, causing the Medicaid funding in the state to be cut by $211 million. Colorado and Georgia announced cuts to Medicaid, even though both states expect to see Medicaid enrollment increase by 500,000 or more this year.

These cuts are having a significant impact on hospitals, outpatient centers, doctor’s offices, and other healthcare organizations. Their essential workers are performing heroically during one of the most challenging time in our nation’s history, often putting their lives on the line. With reimbursements being cut, including those for services already provided, healthcare organizations have to figure out how to make up the difference.

Inspiration from Apple

“Think Different” was an award-winning advertising slogan used by Apple from 1997-2002. In fact, you’ll still find “Think Different” printed on the packaging of some Apple products. The idea behind the campaign was to encourage people to stop accepting the way things are and look for ways to change and improve.

I’ve been encouraging the healthcare clients of Prager Metis to embrace this mindset. Take a hard look at where you are, where you’re going, and how to get there. Instead of simply looking to cut costs to match the cuts to Medicaid, develop better solutions. Find a better way. Get creative and reimagine the entire operation.

Preserving Personnel

The goal is always to avoid cutting payroll, especially with healthcare organizations under so much pressure during the coronavirus pandemic. One silver lining of stay-at-home restrictions that I’ve noticed in accounting and other industries is the unexpected ability to interact with more people face to face. 

When I was dealing with traffic, long commutes, and scheduling snafus, I was fortunate to see one or two people per day. If I schedule my day effectively, I can now see 10 or more people in a single day. I can commute virtually anywhere with a click of a button. Being able to physically see and communicate with partners, customers, and vendors – many of whom I hadn’t seen in a long time – has been wonderful.

If your healthcare organization is not yet offering virtual appointments, would this capability allow you to see more patients without compromising the quality of care? If you’re already offering virtual appointments, can you expand this capability? How can this reduce the spread acquired infections, improve physician availability, and enable more flexible hours?

Can you reduce transportation costs by using video conferencing technology? Can printing costs be reduced? Would it make sense to partner with an expense management or care management specialist? Can patient satisfaction and operational efficiency be improved by eliminating wasteful activities and increasing the use of automation?

With new cuts to Medicaid reimbursements being announced as enrollment soars, this is just a small sampling of questions that can be asked to fill the financial gap and enhance operations.

How Prager Metis Can Help

Our role is not to pretend to be a doctor, but to question why things are being done a certain way and how they can be done differently. We can go through every line item in your business model and identify ways to improve efficiency and save money without affecting essential services. The goal is to control costs while developing better solutions for the communities you serve.

If your healthcare organization needs help dealing with cuts to Medicaid reimbursements, contact us to schedule a consultation.

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