Loss of ACA provisions could jeopardize hospital operations
Many people don’t appreciate the role that hospitals play in our economy and our community. Did you know that the top two employers in the Rochester area are health systems? Forty years ago, manufacturing was a top employer in Rochester when Kodak, Bausch & Lomb, and Xerox were in their prime. However, over the past few decades, manufacturing jobs have been cut in half and now healthcare reigns supreme.
The University of Rochester/UR Medicine is now the largest employer in our region. Rochester Regional Health is the second largest employer. Combined, their health systems cover 11 hospitals in the Rochester area.
Local hospitals create jobs and economic security. For example, Strong Memorial Hospital generates $2.2 billion in economic activity and 16,000 jobs. Rochester General Hospital generates $1.5 billion in economic activity and 11,000 jobs. In addition, the goods and services that hospitals purchase from other businesses create a “ripple effect” in terms of spending for the Rochester economy.
But this trend is not unique in Western New York – it’s mirrored in neighboring cities. Kaleida Health is the top employer in Buffalo and Upstate University Health System is the top employer in Syracuse.
Why is this significant? Because hospitals are fueling the upstate New York economy. New York’s hospitals and health systems are responsible for $141 billion in economic activity annually—10% of the state’s entire Gross Domestic Product—and generate more than 770,000 jobs.
New York’s hospitals are also responsible for generating significant tax dollars for local government. For example, Strong Memorial Hospital and Rochester General Hospital generate $455 million in tax dollars.
Of course, hospitals are primarily known for the healthcare services they provide. Rochester General Hospital and Strong Memorial Hospital provide care to 2.6 million outpatients, treat 225,000 people in the emergency room, admit 67,000 people to the hospital and deliver 5,200 babies. In Rochester, if you or your loved ones need care, we are fortunate to have several quality hospitals to choose from.
Hospitals also provide benefits to the community. Adhering to their charitable mission, they regularly cover the cost of care provided to people in need. They subsidize care to low-income and elderly populations, and continuously invest in community health initiatives.
Therefore, hospitals have very small operating margins. A large portion of hospital reimbursement is tied to Medicaid and Medicare, which do not entirely cover the cost of care. Medicaid only pays 73 cents for each dollar of care and Medicare only pays 95 cents. Hospitals often come up short when their patients can’t afford to pay.
Proposals to repeal and replace the Affordable Care Act are contributing to this challenging environment. Under the Affordable Care Act, New York provided health insurance to uninsured individuals, and through the ACA, received substantial funding from the federal government. Now New Yorkers are at risk of losing their coverage, and the potential loss of federal dollars could result in significant cuts to the state budget.
Rochester Regional Healthcare Association is concerned that hospitals could be severely impacted if the federal government cuts funding to Medicaid. If the state loses millions of dollars, New York state legislators would be forced to make tough choices – either raise taxes or cut spending. However, hospitals are already under enough financial stress and cannot afford any more cuts.
We have entered a tremendously uncertain time. Rochester Regional Healthcare Association has been actively lobbying our state and federal representatives about the impact of repealing and replacing the ACA. The replacement legislation must be simultaneous and meaningful for hospitals and health systems.
We need to protect our hospitals, especially in the Rochester region. We can’t afford to put tens of thousands of jobs at risk. UR Medicine and Rochester Regional Health are the top employers in Rochester and the engines of our economy. Rochester Regional Healthcare Association remains committed to fighting on their behalf.