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S.C. Medicaid head: Hospitals need to change system requiring them to fill beds


By Bill Poovey
bpoovey@scbiznews.com
Published Jan. 15, 2014

South Carolina’s Medicaid director said hospitals need to find ways to break free from their dependence on a system that makes them fill beds to make money. Tony Keck said hospitals with facility costs and debt will remain in conflict financially with private insurers and government programs, such as Medicare and Medicaid, until they get paid to keep those beds empty.

Keck, director of the Department of Health and Human Services, took part in a Tuesday panel discussion about the future of health care with Dr. Angelo Sinopoli, the Greenville Health System’s vice president of clinical integration and chief medical officer and Matthew Shaffer, senior vice president for the major group unit at BlueCross BlueShield of South Carolina.

BlueCross BlueShield of South Carolina Senior Vice President Matthew Shaffer (from left), state Health and Human Services Director Tony Keck and Dr. Angelo Sinopoli, Greenville Health System vice president of clinical integration and chief medical officer. (Photo by Bill Poovey)

BlueCross BlueShield of South Carolina Senior Vice President Matthew Shaffer (from left), state Health and Human Services Director Tony Keck and Dr. Angelo Sinopoli, Greenville Health System vice president of clinical integration and chief medical officer. (Photo by Bill Poovey)

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“We have to, as payers, figure out how to pay them differently, because right now the way hospitals make money is by filling beds.”


— Tony Keck, Department of Health and Human Services

Keck also said that hospitals, while caught in a system that pays them for keeping beds occupied, are also having to deal with only about 60% of those beds in South Carolina being filled.

“For any of you who run industries that depend on keeping your resources employed, you know that once you start hitting 60% and going lower that your business model is soon facing some serious challenges,” he said.

Keck said the Medicaid program provides health coverage for about 1 million people, and the way hospitals make money is the “opposite of where we’re going.”

“The answer isn’t to try to fill more beds,” Keck said after the panel discussion at the Rotary Club of Greenville. “The answer is that hospitals have to start thinking about themselves differently as health systems. And we have to, as payers, figure out how to pay them differently, because right now the way hospitals make money is by filling beds, and that’s because the payers like Medicare, Medicaid and BlueCross pay them to do that. Until we start paying them to keep those beds empty and to invest in primary care and other outpatient services, they are going to continue to struggle with this occupancy problem.”

Keck said there are continuing discussions about “how can the state and how can Medicaid work with BlueCross, for instance, to help transition that system from this bed-heavy system” to the new outpatient system.

Shaffer said that since the outset of the Affordable Care Act in 2010 the only S.C.-owned and -operated health insurer has had more than 100 people a day working on the changes, including those changes that have turned out to be temporary. He predicted more consumerism, which could include “more consumers spending for themselves,” as employers hand off coverage decisions.

Sinopoli said collaboration among all parties involved in health care is ongoing, and he predicted more consolidations of health care systems.

“We have to find ways in health care to change ways we deliver care and the way you access care through technology and other mechanisms,” Sinopoli said, adding that there will be less “face-to-face” time with doctors.

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