Fiscal and Monetary and Policies in the Health Care Industry
(The Obama Health Care Reform / Low Interest Rate)

During the economic recession and financial struggles at both the Federal and State levels, the lion’s share of focus has been and continuous being on Medicaid spending (Fiscal Policy). Since December 1, 2008, the State has reduced Medicaid reimbursement for impatient substance abuse services for three (3) consecutive years. St. Barnabas Hospital in the Bronx has been negatively impacted by these rate cuts by approximately $6.3 million during this time. Reimbursement for inpatient substance abuse services has been a hot issue in the budget discussion between the New York State Department of Health (NYSDOH), providers and trade association. Because this service is a carve-out (reduction in health care costs) service for Medicaid Manage Care organizations, this puts tremendous pressure on the Medicaid Fee-For Service (FFS) program (source: St. Barnabas Hospital internal financial statements’ narrative and Heal NY Phase 21 Application). Inpatient substance abuse services in one of the few money makers for St. Barnabas Hospital in the Bronx, the operating margins for this service help support operating losses for other services (i.e. outpatient and emergency room) for patients who are heavily dependent of Medicaid services or uninsured.

Medicaid Fee-For Service make up over 73% of the Hospital’s cash collection for inpatient services and accounts for 78% of the patient days (source: HANYS Market Expert), St. Barnabas Hospital serves 28% of the inpatient substance abuse patients in comparison to the rest of the Bronx County. Put into further context, the referenced Medicaid percentages equates to the hospital receiving $8.4 million annually from the Medicaid Fee-For Service program. By decertifying 24 beds, the annual Medicaid costs will be reduced to $5.8 million; a saving of approximately $2.6 million in perpetuity for the State of New York (source: SBH Heal NY Phase 21 Application).
Will the Health Care Reform Hurt or Help the Economy? It depends… Yes, it does depend from what point of view we are looking at this new reduction of government (Health Care) expending. Will this have a significant impact of the Gross Domestic Product (GDP)? Some people have a strong belief that it will not and others think it might result in a small aggregate increase in employment because given that the health care sector is one of the more labor-intensive sectors in the United States economy, health care reform, The Patient Protection and Affordable Care Act (PPACA) is likely to have a significant effect on the economy or on unemployment (source: Will Health Care Reform Hurt the Economy and Increase Unemployment? / Robert Wood Johnson Foundation / Urban Institute). The success of cost containment (Medicaid cuts) at St. Barnabas Hospital in the Bronx has saved the U.S. (NYS to be more specific) $5.8 million in the past three years. This Medicaid cut has reduced the taxes or borrowing the federal government has to undertake to finance these programs and in my opinion has helped the government reduces (somehow) the large federal budget deficit that the previous government left us with.

At St. Barnabas Hospital in the Bronx, we have seen firsthand how Fiscal Policy (cutting on government expending) can help close the gap in the federal budget deficit helping the economy expand. We have also experience how increasing government spending can help us too. For the past 4 years St. Barnabas Hospital in the Bronx has been the perfect image of the U.S. Economic downturn showing an operating loss for four consecutive years. We have been forced to liquidate some of our assets because some banking institutions did not want to take the risk to lend us money because of the financial struggles we were in. But, all changed when the Federal Government gave us three years retroactive rate adjustment in 2011 and over $15 million in federal award for years 2012-2015. Now are future look brighter, now we can contribute to the growth of our community (creating new jobs, building new building, buying new equipment).

But Fiscal Policy is not the only kind of policy that has affected the Health Care Sector. We have been touched by the Monetary Policy as well (Low Interest Rate). Because of the low interest rate St. Barnabas Hospital in the Bronx has been able to expand its infrastructures and make new investment in the open economy that we are living in. During 2011 and 2012 St. Barnabas Hospital in the Bronx has been able to build a new state of the art Pharmacy, renovate the Wound Care Center, open a new Sleep Study Center and 11-beds Hospice Unit, and last but not least, build a brand new state of the art 605 spaces Parking Garage. My organization (St. Barnabas Hospital in the Bronx) was able to create hundreds of temporary jobs during the construction period and more than 20 permanent jobs after the constructions were done.

Some people will agree with me that Fiscal and Monetary Policies are good to the economy, to society and every individual that choose to participate on it, but others will tell me “leave the economic along (Laissez Fair)”, but we all know…”It depends.”