INSIDE THE ISSUE

> CHIA Report: System Broken
> The Cost of Medicaid Cuts
> Patients Stuck for 30+ Days
> Children’s Behavioral Health Forum
> MA Repay Disbursements
> Transitions

MONDAY REPORT

Unsustainable: HSN Shortfall on Top of CHIA’s Latest Numbers

The Center for Health Information and Analysis’ (CHIA’s) latest report on the financial health of the Massachusetts hospital system should, once and for all, lead to the undeniable truth that the system is in great crisis.

CHIA’s report on the first quarter of FY2025 – October 1 through December 31, 2024 – shows that the statewide median operating margin for hospitals was negative 0.7%. Fifty-five percent of Massachusetts hospitals reported negative operating margins within that timeframe, meaning they took in less money than they spent to operate and provide care. Seventy-six percent (16 of 21) of reporting hospital health systems – which include affiliated physician practices – experienced negative operating margins during Q1. This reporting period no longer includes the bankrupt Steward Health Care system, which had contributed negatively to the statewide hospital numbers.

The Q1 FY2025 numbers occurred as the shortfall in the Health Safety Net (HSN) fund was on a projected path to exceed $230 million in FY25. (Hospitals alone are responsible for covering that deficit.) The healthcare system is still experiencing a workforce shortage of more than 15,000 employees, while thousands of patients remain stuck in acute care hospitals (see above story). Other worsening cost trends for Massachusetts hospitals include caring for sicker patients in need of longer stays, absorbing inflation and more expensive supplies, and covering services for patients unable to be discharged to post-acute settings.

“CHIA’s quarterly reports are no longer a warning sign; they are a red alert for the painful financial conditions our hospitals are enduring,” said MHA’s Senior Vice President of Healthcare Finance and Policy Dan McHale. “After half a decade of economic turmoil for Massachusetts healthcare providers, the consequences have become more dire and visible than ever — whether they be layoffs, packed EDs, or reduced investments in new technologies and facilities. Given the added uncertainty now emanating from Washington, this is a time for Massachusetts to act on local solutions within its control: addressing the Health Safety Net deficits costing hospitals more than $200 million a year, minimizing the administrative burdens creating nearly $2 billion in annual cost waste, and empowering more flexible models of care to thrive.”

What Medicaid Cuts Could Mean for Massachusetts’ Economy

As the U.S. House and Senate each continue to work towards budget plans that will fund administration-supported tax cuts, it still remains unclear how such a plan could work without cuts to either Medicare or Medicaid or both.

The president and House and Senate leaders have insisted that beneficiaries of the programs will not be affected as Medicare and Medicaid “reform” is undertaken to reduce “waste and abuse.” But the specifics of that reform have not yet been made public.

On Monday, Senator Bill Cassidy (R-La.), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, said on CNBC, “Is there some way that we can cut Medicare so that it’s, excuse me, reform Medicare so the benefits stay the same, but that it’s less expensive, more efficient? I would say that there is, and that’s where our opportunity lies.”

While uncertainty continues on how Medicaid reform will affect care delivery, the economic ramifications of potential cuts are coming into clearer focus. In late March, The Commonwealth Fund published a study from researchers at George Washington University’s Milken Institute School of Public Health entitled How Potential Federal Cuts to Medicaid and SNAP Could Trigger the Loss of a Million-Plus Jobs, Reduced Economic Activity, and Less State Revenue. It illustrates how major rollbacks to the program extend far beyond just healthcare, and could erode many aspects of the American economy.

The state-by-state study estimated that Massachusetts could lose as much as $2.6 billion in Gross Domestic Product; 21,000 jobs, and $188 million in state and local taxes if the U.S. House budget-cutting directive to its committees actually occurs. That directive calls for $880 million in cuts over the next decade for programs under the jurisdiction of the House Energy and Commerce Committee and at least $230 billion for programs under the House Agriculture Committee. The principal entitlement programs under those committees are Medicaid and the Supplemental Nutrition Assistance Program (SNAP), “which indicates that these two programs are the principal targets for budget cutbacks,” The Commonwealth Fund writes.

“Although Medicaid and SNAP provide vital health coverage and food assistance to impoverished Americans, the direct recipients of Medicaid payments and SNAP benefits are healthcare providers — hospitals, doctors’ offices, pharmacies, and nursing homes, among others — as well as grocery and other food stores,” the report notes. “Cuts in federal funding for Medicaid and SNAP shrink revenue for those businesses and their employees, and the effects ripple across other businesses and workers in their supply chains, such as medical equipment suppliers, food producers, and farms.”

This graphic helps explain the “trickle-down” relationship between federal Medicaid funding, local business, and state tax revenues.

A New Wrinkle in Capacity Crisis: More Patients Stuck 30 Days or Longer

In last week’s Monday Report, we reported that “throughput” challenges at Massachusetts hospitals – that is the inability to move patients efficiently from one level of care to another – have persisted, with 2,200 patients in January stuck in acute care hospitals.

This week, MHA has compiled February 2025 data, which reveals an additional, troubling statistic – the number of patients in acute care hospitals unable to transition to post-acute facilities still exceeds 2,000, but the number of patients that have been stuck for more than 30 days has increased dramatically.

February’s data showed 2,197 patients awaiting discharge at a point of time during the month; that’s just three patients less than in January. But notably, 40% of the patients awaiting discharge to an inpatient rehabilitation facility or to a long-term acute care hospital were waiting 30 days or more. That’s up from 26% of such patients in January. Patients waiting 30 days or more for discharge to home health increased from 12% in January to 18% in February.

Additionally, a report published last Thursday in JAMA Network entitled Deporting Immigrants May Further Shrink the Health Care Workforce raised additional alarms regarding post-acute care capacity constraints and throughput in Massachusetts. The report found that “The Trump administration’s plans to deport undocumented immigrants and some with temporary protected status (TPS)—which allows some migrants from countries with unsafe conditions to live and work in the U.S.—and increase legal barriers even for skilled immigrants, could worsen workforce shortages.” The study estimates that more than 1 million non-citizen immigrants — including one-third who are undocumented — work in healthcare.

“Deportations could especially compromise long-term care, where immigrants play a large role,” wrote lead author Lenore Azaroff, M.D., from the Edward M. Kennedy Community Health Center in Worcester. “The resulting shortages could reverberate through emergency departments and hospitals, leading to the inability to discharge patients and tying up nurses and other staff.”

Leaders Come Together to Strategize on Children’s Behavioral Health

More than 150 people attended the Children’s Behavioral Health Summit last Tuesday. The event, co-hosted by MHA and Boston Children’s Hospital, brought together local healthcare leaders, clinicians, and advocates in the pediatric behavioral healthcare field, as well as policymakers to strategize on efforts to address behavioral health challenges among young people. Among those speaking was Kevin Simon, M.D., chief behavioral health officer, City of Boston, who stated, “Mental health is not divorced from community violence.” A special legislative panel featured (pictured above) Senator John Velis (D-Westfield) and Representative Mindy Domb (D-Amherst), the co-chairs of the Joint Committee on Mental Health, Substance Use and Recovery. Domb, noting the financial challenges Massachusetts and the nation may face over the next four years, urged healthcare providers to “prioritize within and across systems” to advance behavioral health.

MA Repay Helps Another 1,700 Professionals

The state has announced that another $75.8 million has been distributed to more than 1,700 behavioral health and primary care providers through MA Repay. The program provides primary care physicians, family nurse practitioners, physician assistants, psychiatrists, psychologists, psychiatric nurse practitioners, social workers, therapeutic mentors, inpatient mental health workers, substance use disorder treatment professionals, behavioral health providers working in criminal justice settings, and school-based mental health providers with funds to help pay off student loans. Since 2023, MA Repay has awarded more than $245 million to 5,500-plus healthcare professionals across the state.

In exchange for a service commitment of 4 to 5 years, eligible professionals can receive loan repayment awards ranging from $12,500 to $300,000. The Massachusetts League of Community Health Centers administers the program for the state. Funding for MA Repay is from both the pandemic-era American Rescue Plan Act and appropriations through the state legislature.

Transitions

Dr. Clara Filice, who has been serving as Acting Chief Medical Officer at MassHealth, has been appointed to the post on a permanent basis.

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Sarah Peterson has been appointed Commissioner of the Department of Developmental Services, effective immediately. Peterson has served as Acting Commissioner since the end of August 2024, following two years as General Counsel for DDS.

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The U.S. Senate last Thursday voted to confirm Dr. Mehmet Oz to lead the Centers for Medicare and Medicaid Services. The party line vote was 53-45 with Massachusetts Senators Elizabeth Warren and Ed Markey voting No.

John LoDico, Editor