Guest Essays, Letters to the Editor, Opinion

Guest essay: Reimbursing below cost weakens hospitals

by David L. Ramsey

Vandalia Health System, made up of Charleston Area Medical Center Health System and Mon Health System, has nine hospitals (plus three affiliated hospitals), 170 ambulatory locations, almost 12,000 employees and more than 1,200 doctors and advanced practice providers. Which means we are dedicated to caring for tens of thousands of patients each year.

West Virginia’s hospitals and their physicians, nurses and other staff work to ensure care for patients and their communities 24/7. In addition, hospitals are often the largest employer in their community. They are part of the fabric of the community like schools and other businesses.

Hospitals, like everyone, are having to deal with 40-year high inflation. The cost of salaries, medicines, supplies, food and equipment have skyrocketed.

While the cost of doing business continues to increase, reimbursement for patients on governmental insurances such as the West Virginia Public Employees Insurance Agency (PEIA) have not kept up with rising costs. Hospitals are told what they will be paid by PEIA. There is no negotiating. In fact, PEIA pays approximately 50% of what Medicare would pay for the same service.

For example, compare payments for a patient receiving a major hip/knee replacement. Medicare reimburses the hospital about $11,500; Medicaid pays roughly $9,100; and PEIA reimburses the hospital about $5,600. This payment doesn’t even cover the cost of the actual hip or knee implant. This is unsustainable in the long term.

The $40 million increase in the PEIA budget and increasing reimbursement rates for medical providers up to 110% of the Medicare rate being considered by the legislature are a good start, however; PEIA needs a systemic solution, not a short-term fix. It’s not surprising that Wheeling Hospital will stop taking PEIA insured patients in July, it is a symptom of a statewide issue. Hospitals are struggling across our state. Over-all, the state’s hospitals lost money last year. Hospitals cannot retain or attract physicians and other staff if they lose money every year. They cannot maintain their facilities and keep up with the ever-increasing cost of technology.

Hospitals are too important to their communities to not address the issue of PEIA under payments!

We applaud the elected leadership who understand that these decisions regarding PEIA affect all West Virginians and we appreciate their work toward finding solutions.

David L. Ramsey is the president and CEO of Vandalia Health.