Medicare/Medicaid Financial Impact Study-Year Four In 1999, the Healthcare Association of Hawaii engaged Ernst & Young LLP to conduct a study to estimate the financial impact of the changes in Medicare and Medicaid payments on the Association's hospital and nursing facility members. Since the study has assisted the Association with its efforts in educating the Congressional delegation, Governor, Mayors, Legislators and the public on the financial condition of the healthcare industry in Hawaii, the study has been updated each year since 1999. The 2002 update of the study highlights the following: Hawaii's healthcare industry continues to play an important role in our economy in terms of revenues generated, individuals employed and salaries paid. Hawaii's hospitals and nursing facilities account for a major portion of the healthcare industry. The Medicare and Medicaid payment changes have had and will continue to have a significant negative financial impact on the Association's hospital and nursing facility members. Hospitals and nursing facilities provide many benefits to our communities through medical education for the interns and residents and community health programs. These programs cost considerable amounts for which very little payment or funding is received. The continuation of these programs may be jeopardized as the hospitals and nursing facilities deal with the current financial pressures. Hospitals and nursing facilities provide care to individuals regardless of their insurance status or ability to pay. The result is a significant amount of bad debt and charity care that may continue to increase due to the higher levels of uninsured and the economic condition of our State. The population of those over 65 years of age, and particularly those over 85 years of age will increase significantly over the next 10 to 20 years. As this population utilizes more healthcare services, the cost of providing care is likely to increase. As Medicare and Medicaid are the major payors for such services, the payment for the services may not keep up with the increased costs resulting in a further decline in the financial position of the hospitals and nursing facilities. Due to the declines in Medicare payment, the increasing cost of community programs and increases in bad debt and charity care, many of Hawaii's hospitals and nursing facilities experienced declining financial results and financial losses. While many hospitals and nursing facilities have developed plans and strategies for addressing the declining payments, the cost of care will continue to increase as the population ages. In addition, hospitals and nursing facilities are incurring costs related to HIPAA, patient safety and bioterrorism. The costs incurred for such initiatives do not necessarily result in increased payments. Reduced payment for services is not only an issue with Medicare and Medicaid. Commercial health plans are also looking to reduce payments to providers as they try to maintain their costs due to pressures to reduce the health insurance premiums by employers. Even while payments for services decreases, the hospitals and nursing facilities must continue to provide access to quality care. Efforts are needed by everyone to address the issues facing the providers of services to the residents of Hawaii. Please contact Rich Meiers at 521-8961 should you have any questions or need additional information. 2002 Report (May take some time to download due to its size.) 2001 Report 2000 Report 1999 Report (You must have Adobe Acrobat Reader, which is free to view these reports.) Working together for the health of Hawaii's people since 1939. Home | Acute Care | Long Term Care | Legislative Watch | Members | Emergency Management About HAH | Programs & Publications | News | Calendar | Patient Safety Contact us