Struggling Public Hospital in Miami Cuts Off Dialysis Payments

(MoneyWatch)  In covering this beat, I sometimes see a story that makes me stop and think, "So that's what's wrong with healthcare." I read such a piece today in the Miami Herald concerning the decision of the Jackson Health System, a major public hospital in Miami, to stop paying for kidney dialysis for 175 poor, uninsured patients. Jackson, which has been fighting to stay afloat in recent months, expects to save $4.2 million by cutting off the payments to private outpatient clinics it had hired to provide the dialysis.

According to a Jackson spokesman, other treatment venues have been found for all but 41 of the patients, who could die unless their dialysis is continued. A third of the unassigned group consists of illegal immigrants, who would be denied the ability to buy government-subsidized insurance under the proposed reform legislation. Of course, all of these people-illegal or not-will end up receiving dialysis in other area hospitals where care is far more expensive than it is in outpatient clinics. Most of that cost will be passed on to insured people and their employers.

Medicare is supposed to cover people who need dialysis, but it can take up to a year for the government program to enroll them. Meanwhile, few of the uninsured can afford three-times-a-week dialysis, which costs about $50,000 a year. The Herald cited one man who lost his insurance at work and had to quit his job so he could get on Medicaid.

Meanwhile, the Jackson Health System continues to struggle financially in the most lucrative, highest-priced medical market in the country. Herewith a brief chronology of recent events:

• Sept. 17, 2009: Facing an estimated deficit of $133 million for its next fiscal year, Jackson says it plans to close two primary care centers and both of its nursing homes, to outsource inmate healthcare and to reduce support to other entities that care for the poor and uninsured.
• Sept. 30: Jackson's board votes in favor of creating a new hospital taxing district that would cost the average homeowner about $300 a year. But the state would have to approve it and the majority of voters are opposed.
• Nov. 10: The health system announces plans to close two transplant units, a mental health unit, a wound care unit, and two primary-care clinics, and to lay off 93 employees.
• Dec. 29: Jackson reveals that, even after its budget cuts, it has enough cash on hand to keep operating for only 21 days, and expects the situation to get worse in 2010. Although cash will keep flowing in to cover daily expenses, the health system is close to insolvency.

Public hospitals across the nation are in the same fix, as the number of uninsured patients grows and state governments cut their subsidies for charity care. It's unclear whether or how soon federal reform will rectify the situation. Although the proposed expansion of coverage would reduce the number of charity patients, the Senate reform measure would cut disproportionate share (DSH) payments to hospitals-the main federal subsidy for indigent care-to 25 percent of their current level. The remainder of the money would go into a new fund for uncompensated care that would be reduced each year as insurance coverage expands.

The Jackson story illustrates one truth about the reform debate: Those who talk about care being rationed by the government have never had their dialysis cut off by a public hospital struggling to keep its doors open. If you're poor, your care is already being rationed.