Morning Must-Read: Richard Mayhew: Rural Hospitals, DSH Payments, and Vegas Hotels

Richard Mayhew: Rural Hospitals, DSH payments, and Vegas hotels: “A commenter asked why so many rural hospitals in Georgia are closing…

…a decent chunk of the explanation is PPACA via the a—ole Chief Justice et al, and the remainder of the explanation is the economics of running a hospital or a Vegas hotel…. Hospitals have very high costs to open up the doors…. However, the marginal cost of treating the next patient for most situations (high end drug treatments excluded) are not that high. Hospitals with high census or heads in beds counts are able to use the high usage of their facilities to cover fixed costs and then operating costs. A recent article on a hospital in Georgia closing illustrates this point:

Lower Oconee Community Hospital in southeast Georgia has closed due to financial problems, becoming the state’s fourth rural hospital to do so in the past two years…. The Wheeler County area had a 23 percent uninsured rate, and 10 percent of citizens are unemployed…. Forty-one percent of the county’s children live in poverty. “We just did not have sufficient volume to support the expenses,” O’Neal told WMAZ. “It’s a terrible situation, and it’s tragic, the loss of jobs and the economic impact.”

So how did this hospital survive so long despite serving a very poor and underinsured area?… Disprorpotionate Share Hospital payments… Medicaid reimbursement bonuses to hospitals that serve underinsured and overly poor areas…. PPACA reduced the pool…. The policy logic… was that the Medicaid expansion and Exchange subsidies should significantly reduce the number of people who are uninsured… therefore the need for DSH payments would decrease.  That logic is sound… as long as… Medicaid… and expansion was a single program that every state in the nation would take as the deal was too damn good to pass up. It is working in the Expansion states. [But] tThanks to the a—oles on the Supreme Court and the sadists and sociopaths in the Republican Party, half the states have not taken up free federal money to cover their poor… massive resistance to Exchange implementation… Georgia as a particularly egregious example…