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Top-Ranked Hospital Cuts Budget $165 Million Due to 'ObamaCare;' Others May Follow Suit

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By Tyler O'Neil , CP Reporter
November 25, 2013|5:59 pm
obama (Photo: Reuters/Kevin Lamarque)

U.S. President Barack Obama meets with health insurance chief executives at the White House in Washington November 15, 2013. Obama said on Friday that he and his top advisors were "brainstorming" with chief executives from top healthcare insurance companies about how to enroll Americans in health insurance before looming deadlines under his Obamacare healthcare law.

Possibly signaling a national trend, The Cleveland Clinic, ranked the fourth-best American hospital by U.S. News & World Report, announced that it plans to cut $330 million from its 2014 budget, and attributed about half of those cuts, roughly $165 million, directly to the Affordable Care Act (ACA), also known as "Obamacare."

Massachusetts General Hospital, ranked number two by U.S. News & World Report, also reported increased budget cuts but did not have a specific number.

"We had to take about $330 million out of next year's budget," Eileen Sheil, executive director of corporate communications at the Cleveland Clinic, said in an interview on Monday. Sheil told The Christian Post that "half of the 330" is directly attributable to Obamacare.

But Sheil set out to correct rumors that the Cleveland Clinic had plans to lay off 3,000 employees. "We offered early retirement to 3,000 employees who were eligible for it," she clarified.

When asked exactly how the president's health reform would impact the hospital's costs, Sheil, an ACA supporter, had an incomplete answer. "A lot of it is uncertain right now," she said. "The exchanges just opened, but we don't know how many people are going to be in the exchanges."

Sheil also mentioned new measures that Obamacare requires hospitals to report. "There used to be a handful of core measures that we had to report – now there's more."

Although the Cleveland Clinic lobbied for an expansion of Medicaid, it will cost the hospital more money, the spokeswoman explained. She reported that Medicaid "pays us below our costs," and "reimbursement from private and government insurance is going down."

While Obamacare exacerbated the need to tighten the hospital's belt, cost cutting predated the Affordable Care Act, Sheil said. "For seven to eight years, we have focused on driving efficiencies in our system, trying to cut costs when we can," the spokeswoman explained.

Sheil presented a multifaceted cost-cutting approach – to everything from medical records to the operating room. The Cleveland Clinic had two imaging programs in two separate buildings, one fully utilized and one largely ineffective. "Now we're at full capacity with one while we were doing less with two," the spokeswoman said. She also said the hospital merged its two fully-staffed neonatal intensive care units, with a similar low-cost, high-efficiency effect.

"Over the last two years, we stopped 12,000 unnecessary tests from taking place," Sheil boasted, turning to the medical records. Hospital staff also put price tags on the equipment in the operating room, which cut costs significantly, as doctors who once used equipment unnecessarily now more carefully select the tools necessary for the task at hand.

Nevertheless, Sheil still stood by Obama's reform act. "We felt strongly that the rising costs of healthcare need to be contained," she argued. "An overhaul needs to be done."

Michael Morrison, media relations manager at Massachusetts General Hospital, told CP in an interview on Monday, "We've tried to stay ahead of the curve in reducing costs year to year to avoid reductions in the same order of magnitude as some other institutions."

Morrison pointed to the 2006 Massachusetts health reform as an explanation for his hospital's lead on cost-cutting. While acknowledging increased costs due to the Affordable Care Act, Morrison also looked beyond Obamacare to explain the need for cost-cutting.

"For us, this is an ongoing process that's not just affected by health care reform but also things like budget cuts to research and sequestration, which is why it's extremely difficult to make detailed specific predictions, especially because factors like this can change so quickly," Morrison explained. Due to situations like these, he explained that Massachusetts General is "constantly evaluating costs to stay ahead of the curve."

 

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