Few may be more enthused about passage of Medicaid expansion in North Carolina than ECU Health, the Greenville-based health care system that serves about 29 counties across the eastern part of the state.
President Brian Floyd says the bill’s passage by state lawmakers should boost the system’s revenue by $60 million to $80 million annually, “It will be a game-changer to help us stabilize” after three difficult years, he said in an interview.
The bill, which hinges on passage of the state budget, would make the federal insurance program available to about 500,000 low-income N.C. residents, including perhaps 100,000 in ECU Health’s region. Floyd says the changes also increase payment rates in recognition that Medicaid payments often don’t cover hospitals’ costs of service.
ECU Health rebranded last year from Vidant Health as part of a new agreement with East Carolina University’s Brody School of Medicine. Like many hospital systems, it faces financial pressures because costs are rising faster than payment rates and many patients are sicker after avoiding care during the pandemic.
ECU projects a loss of about $100 million in its current fiscal year after operating in the red for the past 18 months or so, Floyd says.
In a recent statement, ECU Health CEO Michael Waldrum said the system lost $23 million in the three months ending Dec. 31.
Medicaid expansion will help, but not enough. he noted. “Our downward trajectory will not change if we do not intentionally assess our operations, discover opportunities for growth and cost savings and then implement improvements.”.
The system has engaged two consulting firms to assist leaders in seeking improvements, the CEO added. “We will emerge as a stronger, more collaborative health care organization — with excellence embedded every step of the way.”
Peers also face fiscal challenges. UNC Health reported a $700,000 operating loss in the first eight months of its fiscal year, officials of the Chapel Hill-based system reported last week. The system, which operates in financially robust Wake and Orange counties, had budgeted an $88 million gain during that period.
Fortunately, the system has experienced improved results in recent months, though costs of staffing and sluggish patient volume remain challenging, according to the report to UNC Health’s board. It now projects operating income of $52 million for the 2023 fiscal year.
UNC Health had cash and investments totaling $2.9 billion as of February, about $400 million less than a peak of nearly $3.4 billion in 2021. The health care organization, which is part of the state-owned UNC System, retains top marks from credit rating agencies.
In February, Atrium Health said its Charlotte region had an operating loss of $107 million in 2022, compared with a $337 million gain in 2021. The largest N.C. hospital system is now part of Charlotte-based Advocate Health, which has reserves topping $12 billion and includes hospitals in Illinois and Wisconsin.