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Thursday, March 5, 2015

Cleveland Clinic Posts 'Best Year' in a Decade, While Failing to Cite Medicaid Expansion

Posted By on Thu, Mar 5, 2015 at 3:12 PM

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During yesterday's State of the Clinic address, Cleveland Clinic CEO Dr. Delos "Toby" Cosgrove announced that the hospital had recorded a tremendous 2014.

The good news came on the back of widespread budget cuts in 2013, which partially enabled a healthy $466 million in operating income last year. The Clinic is, of course, expanding its reach worldwide; with that comes a broadening and deepening of the nonprofit corporation's revenue sources. 

Part of the 2013 cuts — several hundred early retirements and job eliminations across the board — were born out of handwringing over the ongoing Affordable Care Act implementation. "Obamacare" was prompting industry-wide uncertainty — still is — and Ohio's Gov. John Kasich was simultaneously signaling a willingness to expand the state's Medicaid program. 

The Clinic ultimately approved the Medicaid expansion, and it's been a game-changer. That little move somehow didn't figure in to Cosgrove's celebration of the past year's successes at the Clinic.

This week, Scene published a feature on the financial boon the Clinic (and other area hospitals) has been experiencing by opening its doors to Ohio's Medicaid expansion. An excerpt (emphasis mine):

The first big number is the increase in Medicaid billings by the Cleveland Clinic, which does 72 percent of its business in Ohio. In 2013, according to their financial statements, the system billed $239 million in Medicaid care. In 2014 that number, projected to include the entire 12 months, rises to $347 million. That amounts to roughly $100 million in extra billings thanks to Medicaid expansion in Ohio.

They also reported that charitable care was down by 25 percent in 2014 over 2013. That works out to a savings of about $43 million. (This is charity care that the Cleveland Clinic classifies as philanthropic and is unbilled.)

But the biggest increase in revenues comes from the reduced number of self-payers and collecting what those self-payers owe. In 2013, self-payers or uninsured were billed $467 million. Of that, $312 million (67 percent) was written off by the Clinic. The projected number for self-payers and uninsured in 2014 declined to $212 million, and if the same 67 percent write off is applied, the hospital's uncollected bills come to $142 million. That's a $170 million difference between 2013 and 2014.

So when you add up the increase in Medicaid billing, the decline in charity care, and the savings from uninsured write offs, the Cleveland Clinic appears to have about $300 million in extra funds related to the Medicaid expansion. Now, we realize that numbers like this can be interpreted by the experts and accountants in a million ways, put in different pockets and pots and amortized in various ways that make little sense to almost everyone. We also realize that some of this money is a one-time-only upfront payment change, as the federal government's plan is to drop payments to hospitals and physicians as Obamacare becomes more established. And this is a measurement of services, not an indication that the U.S government wrote the Cleveland Clinic a check for $300 million last year.



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