While the ramifications of inflation are taking a toll on the economy, one essential industry is facing nearly unsustainable financial turmoil, according to one Mississippi expert.
Tim Moore, President and CEO of the Mississippi Hospital Association, states that hospitals all throughout the U.S. are struggling financially, but ones in the Magnolia State are at an even bigger disadvantage. He says that many systems in Mississippi are failing to break even monetarily for a multitude of reasons.
“It’s actually worse on a state basis than on a national basis. I have talked to systems, independent hospitals, and small hospitals, and the best-case scenario I’m finding for budgeting in 2023 is a breakeven,” Moore said on MidDays with Gerard Gibert. “The big systems are all budgeting losses — big losses.”
Some of the major causes of financial distress within Mississippi hospitals are the disparity between hospital bills and what is actually paid, rising costs of necessary supplies, and labor. Moore says that hospitals do not receive payments in the total amount due on a bill. In fact, they receive roughly one-third of the remittance.
“Well the biggest component there is the bill is certainly not what is going to be paid. It’s going to be a fraction of that and in most cases it’s somewhere around 30 percent, and in some cases, depending on who the payer is, it may be worse than that,” Moore added. “That’s the issue. We have seen historic increases in expenses: supplies, drugs, the big one — labor. 50 percent of a hospital’s expense customarily was made up by labor.”
Without specifying names, Moore also revealed that five Mississippi hospitals are on the brink of shutting down, despite record profits from insurance companies. While insurance companies are able to leverage prices and collect from users when services are not performed, hospitals do not have the same luxury. A hospital’s inability to have control over the price of services that require more expensive labor and products has caused a disruption in the ability to profit.
“At the end of the day, we know that expenses are going up 15 to 20 percent, or have since 2019, and revenues are still flat or at a three to five percent increase. That doesn’t work. There is not an industry that will survive without subsidy,” Moore stated. “We’re in a situation where you’re going to have something from somewhere or you’re going to have hospitals close across the state of Mississippi.”
The full interview with Tim Moore can be watched below.