LINCOLN — Nebraska hospital leaders said Monday that a combination of increased costs of labor and supplies, and a failure of Medicaid and Medicare to fully reimburse services, is stressing the state’s health care system.
More than half of the state’s hospitals operated in the red last year, they said, and 2023 is expected to be just as challenging financially.
Hospitals are cutting back, and in some cases eliminating, service, officials said. And at least five rural Nebraska hospitals are at risk of closing, according to a January report from the advocacy group, the Center for Healthcare Quality and Payment Reform.
‘Very concerning’ trend
“This trend is very concerning. The current economic model for hospitals is simply not sustainable,” said Summer Owen, CEO of Great Plains Health in North Platte.
Bryce Brackle, vice president of finance for Nebraska Medicine in Omaha, said his hospital sustained an $18.6-million loss in 2022 and is projecting another year of red ink in 2023.
The two officials, along with Jeremy Nordquist, president of the Nebraska Hospital Association, said reimbursement for Medicaid and Medicare patients has failed to keep up with the costs of patient care that have risen 21.3% from 2020 to today.
They cited these factors during a press conference in contributing to a financial “crisis” in their industry:
- Labor challenges, including an exodus of employees during the high stress of the COVID-19 pandemic. Workforce costs have risen 26.8% since 2020.
- Inflation. Medical supply costs are up 25.4%, and drug costs have risen 42.5%.
- Reimbursement rates for patients on Medicaid and Medicare, which haven’t kept up, with the average loss for Medicaid care of 60%.
55% of hospitals lost money
The average operating margin for hospitals, the officials said, has dropped from 6.6% in 2021 to 1.8% last year, with 55% of the state’s hospitals reporting net losses.
“We anticipate that these challenges are not going away,” Nordquist said. “We continue to see tough decision made by hospital leaders to make ends meet.”
The hospital officials urged the Nebraska Legislature to take action.
Among the bills that would help, they said, would be Legislative Bill 128, which seeks to increase the reimbursement rate for Medicaid, and LB 586, which would increase the clinical training sites for nurses.
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