The sequester, a series of automatic federal spending cuts that took effect March 1, will decrease funding for Emory Healthcare, including estimated reductions of $9 million per year for Emory Hospitals and $2.9 million per year for The Emory Clinic and Specialty Associates.
As a result, Emory Healthcare will continue the consolidation and standardization efforts to reduce costs that it has started in the past few years, Emory Healthcare CEO John Fox and CFO James Hatcher wrote in a joint statement to the Wheel.
Cameron Taylor, Emory’s director of federal affairs, detailed the impact of the sequester on the University in a March 5 article in Emory Report. She wrote that the sequester “threatens health care jobs, as well as our ability to provide quality health care and train the next generation of doctors.” Nationally, Medicare has undergone a two percent payment cut.
Taylor wrote that sequestration threatens Medicare hospital and physician payments “at a time when providers already face a broad range of reimbursement cuts in the coming year.”
The sequester was mandated by the Budget Control Act of 2011, a piece of legislation that resulted from Congress’ failure to enact legislation to reduce the federal deficit. The spending cuts that took effect on March 1 will impact Emory primarily in the areas of financial aid, research funding and health care.
“Both Medicare beneficiaries and providers will feel real pain from the cuts,” said Jeremy Lazarus, the president of the American Medical Association (AMA), in a March 1 AMA statement. “Sequestration will widen the already enormous gap between what Medicare pays and the actual cost of caring for seniors.”
A report released on Sept. 12 by the AMA in collaboration with the American Hospital Association and the American Nurses Association found that the two-percent reduction in Medicare funding would eliminate up to 766,000 health care and related jobs by 2021.
Emory Healthcare had already been planning for funding reductions prior to the sequester, Fox and Hatcher wrote. According to Fox and Hatcher, Emory Healthcare has for several years been undergoing a “consolidation of all back-office functions to achieve efficiencies and maximize effectiveness.”
Fox and Hatcher also noted that the sequester accelerates Emory Healthcare’s efforts to narrow its supply options, which will lower costs from supply vendors.
In addition, Emory Healthcare is moving all hospital and physician practices to a common, shared Information Technology (IT) platform.
The elimination of duplicate systems, Fox and Hatcher wrote, will save money and improve efficiency.
William Bornstein, the chief medical officer and chief quality officer for Emory Healthcare, wrote in an email to the Wheel that the sequester also facilitates the standardization of clinical protocols. Standardization, he wrote, improves the quality of safety and care while also lowering costs “by reducing wasteful complexity.”
“Judicious standardization facilitates appropriate individualization of care when it is most important,” Bornstein wrote, explaining that Healthcare’s “work on standardization began before the sequester and is intensifying.”
– By Jordan Friedman