Yesterday, the Health Services Cost Review Commission met and voted five to one on having the Sequestration cuts absorbed by hospitals in Maryland. No sharing with insurers, no absorbing into rates. Today, I am at a meeting with other Maryland CEOs and CFOs and everyone is trying to figure out how to absorb the millions of dollars in cuts without impacting people. You would think that it would be relatively easy with, according to insurers, 30% of spending in health care being waste. Well, it isn't that easy.
It has taken WMHS almost three years to get where we are today with changing how we do business. We have done so by addressing unnecessary tests, dealing with redundancy in processes, reducing potentially preventable conditions, performing operating cost improvements, addressing readmissions, case managing the frequent utilizers of our services and the list goes on. And, we aren't done. There is a lot more that we can do, but it takes time. The impact on rates is virtually an overnight change for most Maryland hospitals. Hospitals need a glide path for change; payors and regulators don't see the need primarily because they have no understanding of how the health care system works nor do they grasp the extent of regulation on hospitals. Unfortunately, most have never worked in health care.
Anyway, WMHS is fortunate since we took advantage of a new payment methodology three years ago through a demonstration project. We have used a glide path during that time so we are better positioned today to absorb the $1 million cut for only one quarter for WMHS. We can't absorb much more going forward so, I hope that the HSCRC will address the Sequestration cuts for FY 2014 at their next meeting in June as they have promised.