Mary Mayhew fears Washington push to simplify policy could starve Florida’s hospitals

As Congress explores ways to cut health care spending, Florida Hospital Association President Mary Mayhew says lawmakers shouldn’t starve hospitals of revenue.

With nearly a third of Florida hospitals operating at a loss, she scoffed at rhetoric painting medical institutions as profiteers.

“I’m concerned with the overly simplistic approach to these policy discussions. We like to say that the system is complex. It’s not that the system is complex. We’ve made it very complicated through lots of laws and regulations and payment systems that are not rational,” Mayhew said.

“What we want and need from health care is very straightforward. We want it timely. We want it to be efficient, high quality and produce the best possible outcomes.”

The former Agency for Health Care Administration Secretary participated in a panel on Capitol Hill on Thursday about the challenges already facing Sunshine State institutions. The event, hosted by U.S. Rep. Aaron Bean, sought areas of consensus between health care lobbies including hospital organizations, the pharmaceutical industry and political reform advocates.

“Pharma and hospitals today both agreed that there needs to be reform,” Bean told Florida Politics. “They disagreed on how far it should go and what it should focus on, but both of them have acknowledged the system we have now is broken, unsustainable, expensive and not focused as much on the patient as it should be.”

Mayhew spoke on the same panel as Dr. Asmita Mishra, Medical Director of Payer Strategies for Moffitt Cancer Center.

The two were both invited to a discussion on site neutral payments, a policy of standardizing Medicare payments for patient services.

“Congress actually took a major step in this direction when it had enacted the bipartisan budget act of 2015 which required that most services delivered in newly established off-campus outpatient departments be reimbursed at the Medicare Physician fee schedule rate,” explained Chris Jones, Director of Federal Government Relations at BIO, while moderating the panel.

Mishra, though, said she opposed shifting any further toward a neutrality policy. She said centers like Moffitt provide specialized treatments to patients.

“Site neutrality would have significant impacts to our institution and curtail our ability to give those complex treatments,” she stressed.

Mayhew classified the push toward neutrality as political sloganeering. “It’s not neutral in terms of what we expect — not just expect but what we need from our health systems,” she said.

The Florida medical industry figures sparred on a range of policy issues with Michael Baker, Director of Health Care Policy for the American Action Forum, and Anna Bonelli, Director of Health Policy for the Committee for a Responsible Federal Budget.

Bonelli stressed that bringing policy closer to site-neutral payments was originally conceived as a way to help hospitals and outpatient departments to address the needs of high-complexity patients. She said the current system was being exploited by medical systems and that Medicare is now “being used to finance other portions of hospital systems which it was never intended to do.”

Mayhew bristled at the notion. She told Florida Politics the current direction of conversation in Congress wrongly painted hospital groups as exploiters of federal resources, yet nearly 30% of Florida hospitals operate now with negative margins, and around 40% are operating with profit margins of less than 5%.

“This isn’t unique to Florida. This is a national challenge,” she said. “Medicare and Medicaid are often the most significant revenue utilization of hospitals. So Medicare and Medicaid dominate in terms of the utilization, the number of patients, but they pay far less than the cost. Medicare pays around 82 cents on the dollar of cost. Medicaid pays around 55 cents.”

That means in any area without a high number of privately insured patients, hospitals run in the red.

She said medical professionals all share a fear of insolvency around the Medicare program. But she pushed back on complaints in Washington about the difference in costs for an MRI at an independent imaging center versus a full-service hospital, and said larger institutions need that support to keep maternity wards and other services operating.

Payment changes have already created a number of OBGYN deserts in Florida, she said. Meanwhile, a survey from the Florida Hospital Association found 30% of OBGYN practices will no longer deliver babies because of liability concerns, with medical malpractice insurance premiums for obstetricians in Florida now running around $250,000 a year.

“That doesn’t work for anyone,” she said in the panel. “Whether you are on Medicaid or commercial, when you are expecting a baby, you don’t want to drive a great distance to be able to deliver your baby.”

The Bean event also featured discussion of reforming the 340B charity drug program. During that, Mayhew said she had trouble listening to pharmaceutical industry advocates laying blame on rising costs on hospitals providing drugs to patients.

“Most people understand that drug prices are through the roof, so it shouldn’t be hard to then think about the amount of drugs that hospitals have to buy, and what a financial burden that is,” Mayhew said. “If we want our hospitals to continue to provide free care, to be able to support the primary care physician practices, they’ve got to be able to benefit from a discount on these extremely expensive drugs.”

Mayhew said she understands the desire to unwind decades of complicated regulations and programming, but suggested it won’t be as simple as political leaders often suggest.

“For our health care system, we don’t get to just flip a switch and have the latest specialist recruited, purchase the latest equipment, build the new OR (operating room),” Mayhew said.

She pointed to an example in South Florida of a hospital making major investments in serving the community, but having to do so as policy debates in Washington could potentially alter all of the hospital’s revenue models.

“Jackson Health in Miami is building a state of the art emergency department, totally redesigning how individuals interact with an emergency department, creating separate areas for children and Women, and really looking at that design that is an incredibly expensive undertaking,” Mayhew said.

“It’s been planned for years. My fear about these policy discussions is that they can be short-sighted and fail to understand the investments that need to be made over a much longer period of time.”