Grady Memorial Hospital’s finances have seen a sharp turnaround this year, heading into positive territory after a 2011 laden with red ink.
Grady officials have told Georgia Health News that through July, the Atlanta safety-net hospital has a surplus for the year of $1 million. While that’s not a huge cushion, Grady was losing $17 million at this time last year, and finished 2011 with a net loss of $27 million.
The turnaround, says Grady CEO John Haupert, stems partly from the hospital’s converting a higher percentage of uninsured patients to Medicaid, and from its collecting more ‘‘outlier’’ payments from government programs. These payments happen when hospitals incur an abnormal amount of costs while taking care of a patient.
Grady also cited improvements in its financial and revenue management systems.
The good financial news comes as safety-net hospitals continue to face stiff challenges to their bottom lines, with the number of uninsured and underinsured patients increasing.
These hospitals provide a much higher amount of uncompensated medical care than most community hospitals, said Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management, in an interview with GHN.
Large public hospitals “have a worse revenue stream,” Anderson said. “None of them are doing terribly well.’’
Added Beth Feldpush, vice president for advocacy and policy at the National Association of Public Hospitals and Health Systems, “Safety-net hospitals have long operated on narrow margins and faced unique funding challenges – and have learned to do more with less.”
Grady, meanwhile, has steered away from the brink of collapse over the past five years. Its 2008 privatization was followed by the injection of philanthropic money for long-needed capital improvements.
But the hospital has also dealt with lower funding from DeKalb and Fulton counties, staff cuts and clinic closings, and has withstood the controversy over the shuttering of its outpatient dialysis center.
And last week, WSB-TV reported that Grady suspects that two former employees may have stolen more than $500,000 from the hospital. Grady has turned over the results of its investigation of the ex-employees to the U.S. Attorney’s Office, said Haupert, who took over as CEO last October.
The hospital has served as a vital cog in metro Atlanta medical care, treating a large share of the area’s poor and uninsured patients.
The hospital’s percentage of uninsured patients has recently dropped from 32 percent to 28 percent, the result of identifying more who qualify for Medicaid, the government program for the poor and disabled. That trend is important for Grady because many of these patients wind up being unable to pay the bills for care themselves.
And for the patients who gain Medicaid coverage, Haupert said, “You’ve opened up a world to them in terms of access to health care. I’ve seen so many times the relief on their faces.’’
In addition, the collection of outlier payments has helped buoy Grady’s finances.
“Last year, the state had some problems in the way they were processing outliers,’’ said Mark Meyer, Grady’s chief financial officer. “We’re getting caught up.’’
And the new IT system for Grady is running the financial side of the hospital better, including billing and revenue management.
Haupert also said Grady has improved its documentation of patients with multiple health problems –- called the ‘‘case mix index’’ –- and has lowered its readmission rate for heart failure patients through monitoring their weight gain and medication use.
He said Grady is taking many steps to improve its auditing ability. “We were moving in that direction before [the WSB-TV report] came out,’’ Haupert said.
But there are also some storm clouds ahead for Grady.
One of them involves Medicaid expansion. States were basically required to do it under the 2010 Affordable Care Act, but a Supreme Court ruling made such action optional. If Georgia chooses not to expand Medicaid, Grady would not get the steady stream of revenue from these patients, who are currently uninsured but would gain government coverage under the ACA.
At the same time, Grady would also see a large cut in its government funding for taking care of a high proportion of poor patients, in what’s called the ‘‘disproportionate share’’ program. That hit, required under the ACA, would be $45 million.
And Grady also currently gets another $9 million from the state’s hospital provider tax, which will be up for debate in the 2013 General Assembly.
Haupert said he hopes the counties’ Grady contribution remains at about the same level as exists currently.
One of Grady’s goals is to attract more privately insured patients, now about 9 percent of its patient mix.
Meyer and Haupert said they want to build a financial structure that’s sustainable for the long term.
“We’re not into the quick fix,’’ Haupert said.