Emory and the Economy

Letter to Emory Healthcare Staff
From John Fox, president and CEO, Emory Healthcare, on EHC Economic Update
Distributed electronically June 25, 2009

Dear Emory Healthcare Staff,

During the past several months, I have communicated with you about the impact of the economy on Emory Healthcare. I promised to keep you apprised of our economic position during this bad recession and now want to let you know where we stand. First and foremost, please remember our priorities have not changed and our focus remains on our two main jobs:

Job #1 - Provide patients and their families with the very best care possible.

Job #2 - Preserve jobs, as best we can.

As we ride out this economic storm, our resolve continues to be to avoid across-the-board layoffs and preserve jobs while not compromising the excellent care we provide.

Our Current Status

Overall, our hospitals and clinics have been fairly busy. In April, we had very high volumes in a number of clinical areas, and May was less busy. When beds and waiting rooms are full, it seems like our finances should be in great shape. Unfortunately, this has not been the situation.

• Our April and May financial results were a major disappointment and reflect the impact of the recession on our system.  
• Patient volumes are ahead of last year (patient visits and admissions).
• Revenue from those volumes is falling very short due to negative changes in payor mix and uncompensated care.

What we know:

• We receive the highest reimbursement per patient day when a patient has commercial insurance, 
• We are paid about 40% less than that when a patient is covered by a government program, such as Medicare and/or Medicaid, and
• Our reimbursement drops to about 15% of billed charges when a patient is uninsured and responsible for his or her own bill.

Because of the economy:

• We see fewer patients with insurance, such as BlueCross, and
• More patients with Medicare, Medicaid or, even, no insurance.
• More people are losing jobs and cannot afford insurance or cannot continue to make insurance payments.

Payor mix issues are not unusual in America right now. However, the speed at which the payor mix has changed for Emory Healthcare is significant. This shift in payor mix is across our system and has been a particular problem at EUH. 

The chart below shows how the EUH payor mix changed during FY09. The increase in patients who pay through government programs and the drop in patients who pay with regular insurance gave us a revenue variance in May of $6 million. 

Percent of EUH Patients by Payor Type for September 1, 2008 – April 30, 2009

Where Are We Headed?

The tough part – for patients, staff and physicians – is not knowing when the recession (and high unemployment) will end. Here are the facts:

• Georgia’s unemployment rate doubled in the last 12 months to more than 9% and is likely to reach 10%, or more, this summer.  
• Rising unemployment means our payor mix problems will get worse before they get better.
• There is not a lot we can do to change our payor mix or make it more favorable.
• We are morally committed to help all individuals in need of our medical care.  

We can and must stay vigilant as we control expenses – your feedback on cost savings has helped tremendously. But, the economy has not gotten better, and we must look for other ways to continue to reduce costs. I welcome new cost-savings ideas from you and your teams. We must keep our eye on Job #1 – with patients as the top priority, and on Job #2 - work to preserve jobs, as best we can.
 
Over the summer:

• Your executive team will work to monitor the financial environment and prepare us for FY10.  
• We, honestly, do not know exactly how we might need to respond to the economy and health care reform.  
• We will do all we can to avoid large scale layoffs; yet, we will need to restructure in some areas.  
• Remember, to carry out our EHC mission, we must remain financially healthy, at some level, or we risk our core purpose – serving our patients and their families.  

While we face challenges, I see the “wins” you give our patients every day. Patients and families are thankful for how you care for them. Our patient satisfaction scores have never been higher. Clearly, you have your eye on Job #1. Know that while you care for our patients, I will keep the focus of our executive team on doing all we can to give you the support you need to deliver Emory-quality care.
 
Thank you for your dedication and your commitment; it is an honor to work with you.
 
Sincerely,
 
John

John T. Fox
President and CEO
Emory Healthcare
1440 Clifton Rd., NE,
Atlanta, GA 30322
john.t.fox@emoryhealthcare.org