[Congressional Record Volume 144, Number 37 (Friday, March 27, 1998)]
[Extensions of Remarks]
[Pages E501-E502]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     THE FUTURE OF PUBLIC HOSPITALS

                                 ______
                                 

                           HON. LOUIS STOKES

                                of ohio

                    in the house of representatives

                         Friday, March 27, 1998

  Mr. STOKES. Mr. Speaker, as we examine proposed changes to the 
nation's health care delivery system, we must consider the vital role 
that public hospitals play in our communities. Recently, Dr. Bailus 
Walker, Director of the Health Policy Program at the Joint Center for 
Political and Economic Studies and Deitra Hazelwood Lee, a Research 
Analyst, prepared a report which is entitled, ``The Future of Public 
Hospitals.'' The report gives in-depth insight of the problems 
confronting the nation with regard to the decline of public hospitals. 
The work is worthwhile reading and I am pleased to share it with my 
colleagues and others throughout the nation.

                     The Future of Public Hospitals

       Public hospitals nationwide are struggling to provide 
     medical care to those Americans who need it most--the poor, 
     the underinsured, and the uninsured. Because of the growth of 
     Medicaid managed care, reductions in federal and state 
     government funding, and the rise in the number of people 
     without insurance, some public hospitals no longer have the 
     financial stability to stay afloat. Many are merging, 
     converting to private institutions, or closing their doors.
       In the past, most cities had at least one public hospital, 
     and cities like New York and Los Angeles had entire public 
     hospital systems. But between 1981 and 1993 the number of 
     public hospitals fell by 25 percent, a trend that is 
     accelerating. Now Congress plans to cut Medicaid funding 
     given specifically to public hospitals that serve a large 
     number of Medicaid, low-income Medicare, and uninsured 
     patients. The pending budget cuts are also going to shrink 
     public hospitals' revenues far below what is necessary to 
     meet the many health care needs of those who rely on this 
     system for treatment.
       Given the popularity of privatizing services, and the 
     apparent growth of so many forms of health care, some--though 
     not the poor--may wonder, Why is it worth preserving public 
     hospitals at all? Can't the rest of our health system pick up 
     the slack? It would be nice if that were possible, but the 
     facts prove otherwise. Indeed, already the tears in the 
     public hospital safety net are creating a new healthcare 
     crisis in its own right. It we continue to lose these 
     hospitals, many African Americans and other minorities, 
     especially in urban communities, stand to lose their last 
     certain access to medical care.
       Public hospitals provide a significant share of all 
     hospital care for those who are socially

[[Page E502]]

     and economically underprivileged. As hospitals of last 
     resort, they have become a health care safety net because of 
     their policy of admitting anyone, insured and uninsured 
     alike. They also have a tradition of striving to be 
     culturally sensitive. Finally, public hospitals provide 
     essential medical services--which few clinics can offer and 
     private hospitals often find unprofitable--such as emergency 
     care, trauma care, burn care, and neonatal care, and they 
     provide these vital services for the entire community.
       The importance of this situation is brought into sharper 
     focus by the increase in the number of uninsured. The most 
     recent data suggests that there are more than forty million 
     people in the United States who lack health insurance, 
     including more than seven million African Americans. The 
     number of uninsured is growing steadily as the cost of 
     insurance continues to rise and as full-time, full-benefit 
     employment remains scarce for urban minorities. Many full-
     time positions are being replaced as well by temporary of 
     part-time jobs without health coverage. If the number of 
     uninsured continues to grow, public hospitals will be the 
     most affected because a large percentage of their patient 
     base is the uninsured.
       Many large, urban public hospitals also conduct medical 
     education and research, which benefits the entire health care 
     system. Many serve as teaching hospitals, where they train 
     students. In addition, some urban public hospitals are major 
     employers in the cities they serve. Closing these hospitals 
     therefore increases the potential unemployment of both 
     skilled and unskilled workers given the changes not only in 
     the health care industry but in other related industries as 
     well.
       Many states have modified their Medicaid programs by 
     shifting their method of delivering health care to managed 
     care. Federal waivers now allow states to require that their 
     Medicaid recipients enroll in managed care organizations, and 
     many states have already modified their Medicaid programs 
     with this new requirement. As of June 1996, this changeover 
     had been carried out by 29 states and the District of 
     Columbia.
       This change in Medicaid policy is causing public hospitals 
     to lose a large percentage of their patient base to managed 
     care organizations. Approximately 43 percent of public 
     hospitals' patients are covered by Medicare, Medicaid or 
     other public insurance, and an equal proportion are 
     uninsured. Even more important, 50 percent or more of these 
     hospitals' revenue has been based on Medicaid payments. 
     Unless they can effectively compete for low-risk Medicaid 
     patients, they may soon lose so much revenue that they will 
     simply have to close.
       In addition to the managed care changeover, Congress plans 
     to cut the Medicaid funding that has long been given 
     specifically to public hospitals that serve large numbers of 
     Medicaid, low-income Medicare, and uninsured patients. This 
     special assistance, known as Disproportionate Share Hospital 
     (DSH) payments, is set to be reduced by $10.3 billion over 
     the next five years according to the proposed Balanced Budget 
     Act of 1997.
       According to the National Association of Public Hospitals, 
     federal DSH payments account for 13 percent of public 
     hospitals' total revenues and pay for 40 percent of the cost 
     of treating uninsured patients. The spending budget cuts are 
     therefore going to shrink public hospitals' revenues far 
     below what is necessary to meet the many health care needs of 
     those who rely on this system for care.
       The Joint Center for Political and Economic Studies, a 
     research and policy think tank which attempts to increase 
     black involvement in public issues, recently held a series of 
     forums on these issues, including a Capitol Hill briefing 
     chaired by Congressman Louis Stokes. The forums were 
     supported by a grant from The Commonwealth Fund of New York. 
     What emerged from these forums was a set of six policy 
     options and positions that, if adopted, could go a long way 
     toward ensuring that the health care resource that public 
     hospitals represent to inner city residents is preserved.
       First: Maintain support from the community and local 
     government by ensuring that these groups and officials are 
     well informed and can participate in the decisions affecting 
     the survival of public hospitals.
       Second: Public hospitals should aggressively compete with 
     managed care organizations for low-risk Medicaid and Medicare 
     patients.
       Third: State and local governments should upgrade urban 
     public hospitals so they can have a realistic chance of 
     competing for patients.
       Fourth: Urban hospitals should reduce or reorganize their 
     staffs to reduce their costs and improve quality service. A 
     reduction in cost along with an improvement in public 
     perception will help public hospitals compete.
       Fifth: Federal and state governments should give Medicare 
     and Medicaid subsidies to hospitals based on their service to 
     the poor and uninsured.
       Sixth: Federal and state governments should establish a way 
     to monitor the care given by urban public hospitals.
       Public hospitals today are suffering from a condition that, 
     if left untreated, may prove fatal. The importance of their 
     survival needs to be recognized and addressed. If we lose 
     these safety-net institutions, many people will no longer 
     have access to any medical care. The health of the people who 
     live in urban communities--the majority of whom are African 
     American, Hispanic, and other minorities--depends on public 
     hospitals' remaining viable American institutions.

     

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