Hospital financial strain is unsustainable, threatens access to care

The MHA exists to advance the health of individuals and communities, and we support our member hospitals with that goal every day. If we’ve heard one resounding concern from hospitals this year, it’s that the financial vice in which they are trapped — wedged between skyrocketing costs and stagnant and inadequate reimbursements — is pushing them to a breaking point.

Michigan communities are at risk of losing access to quality care unless we address the funding crisis our hospitals are facing.

A Sept. 2 Modern Healthcare article detailed the struggles of hospitals across the country:

• Dwindling workforce and nurses, some of which are lost to traveling agencies who are penalizing record profits at the expense of nurses and patients.

• Access to psychiatric beds is even worse than usual due to staff shortages and a lack of emergency funds.

In Michigan you find the same circumstances: We’ve lost approximately 1,700 occupied hospital beds since 2020.

The American Hospital Association (AHA) recently launched a nationwide call to sound the alarm about the financial burden on hospitals and the looming risks to patient access if policymakers don’t act. Michigan-headquartered Trinity Health (and MHA member) spoke during that call and outlined the severity of their system’s financial burden and how it affects their ability to get the right care to the right people at the right time – right here in Michigan.

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Several factors have contributed to the strain on hospital resources: fewer staff, increasingly ill patients, and higher costs that cannot keep up with inflation. The average length of hospital stay increased by nearly 10 percent from 2019 to 2021, according to a new AHA report. Compensation for direct nursing and home care jobs increased by about $200 million from 2019 to 2020, but the number of jobs fell by about 11,000. Hospital labor costs per patient also increased by 19 percent. Healthcare reimbursement is unable to respond quickly to inflation as rates are negotiated in advance, creating additional financial challenges.

All of these factors have put devastating pressure on the hospitals we rely on for trauma care, cancer treatment, prevention services, health education and more. And unlike many service providers, hospitals cannot simply increase their remuneration.

Some short-term solutions — like the $225 million provided by the Michigan legislature for health care retention, recruitment and training — provided temporary relief but didn’t solve long-term problems. Unfortunately, this funding was a drop in the bucket for healthcare’s financial challenges. In a recent survey, a portion of MHA members said they will spend $1.1 billion more on labor in 2022 than in 2020.

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We know it’s not just about funding. It’s also about patient care and rebuilding the talent pipeline. To that end, the MHA supports efforts such as ensuring licensed providers are able to practice to the full extent of their license and training, expanding nursing degree programs at community colleges, forming partnerships with human resources development agencies to improve talent pipeline management, and more more. We are also working to ensure that all employees feel safe and supported despite increasing instances of violence against our employees.

We must have all hands on deck. The US is facing a major shortage of medical workers. As the number of Medicare recipients in Michigan has grown to a total of 2.1 million people over the past five years, Michigan needs more health workers to care for the state’s aging population.

Conclusion: Michiganders deserve quality, accessible, and affordable health care services, and without the financial resources to adequately provide that care, Michigan hospital services will be lost. Like the local hospital, so does the local economy. Healthcare is Michigan’s largest private employer, and healthy communities — and financially healthy hospitals — are directly linked to a strong economy. Young people and families will not take root in a community without good health care. Businesses want their local workers to receive quality care so they can get back to work.

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Michigan hospitals are not giving up the fight to serve their communities. But they need political support now more than ever. Emerging from the dark depths of a global pandemic, we find our way through economic and inflationary pressures influenced not only by national but international problems, and see our populations aging and getting sicker. The way we have always funded healthcare facilities is no longer enough. We call on lawmakers in Lansing and Washington, DC to join us in supporting smart, evidence-based investments in healthcare that ensure communities continue to have access to quality care and the economies that support those institutions continue can thrive.

Brian Peters is the Chief Executive Officer of the Michigan Health & Hospital Association

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