“Medicaid Cuts Will Affect Everyone” Says UAB Health System CEO

Rachel Osier Lindley | August 10, 2015

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Alabama lawmakers are contemplating cuts to Medicaid to help fill a more than $200 million state budget shortfall. Proposed spending plans cut millions from mental health services, law enforcement, state agencies and Medicaid. State hospitals are especially concerned about potential cuts to Medicaid. Will Ferniany, PhD, Chief Executive Officer of UAB Health System, the largest academic medical center in Alabama, told WBHM’s Rachel Osier Lindley why talk of Medicaid cuts has him worried.

Pillars of Alabama Healthcare

Ferniany calls Medicaid “very important” to the healthcare system in Alabama. “Imagine the healthcare system in Alabama was a stool. There are three financial pillars that hold the stool up,” Ferniany says. “One is commercial insurance, such as Blue Cross and Viva. Second is Medicare, which is insurance for the elderly. The third is Medicaid.”

If one pillar goes down, Ferniany says the system will fail for everybody. Smaller hospitals will go out of business, while larger hospitals will have to lay off staff and cut services.

 

“It will be a significant effect on everybody. It’s not just the Medicaid recipients that will be affected. It will be everyone in the state,” he says.

Medicaid in Alabama

UAB is one of the major providers to Medicaid recipients in Alabama. “We treat about $268 million of Medicaid a year — 15 to 16 percent of our patients are on Medicaid,” Ferniany says.

He says Children’s of Alabama, where UAB’s faculty practices, is the major provider to Medicaid patients since most of those on Medicaid are children, women and those that are disabled.

 

Courtesy of UAB
Will Ferniany, PhD, Chief Executive Officer of UAB Health System

The Real Numbers in Medicaid Cuts

Ferniany says the cuts would be worse than they sound, because Alabama would miss out on matching funds from Washington. “The $157 million cut [to Medicaid] would really be a 450 million dollar cut, because the state of Alabama would not get the federal match,” he says. “Under the current proposal, it’s a $34 million cut that would be approximately be $100 million in actual loss of spending in Alabama.”

 

Alabama is the only state in America where the general fund money and general tax money does not go to support the hospitals. “The hospitals assess themselves, tax themselves then use that money to go to the federal government to support Medicaid,” he says.

The Domino Effect

Ferniany says the cuts that worry him most would be towards physician payments. “We already have a shortage of physicians in Alabama. If we start cutting payments, we will have physicians that will leave the state,” he says. He think this would have a domino effect.

The decrease in funds would affect rural hospitals and cut outpatient dialysis programs.

“The legislators are not hearing from the people they are representing. We need people to contact their legislators, and tell them that this is not the right thing to do,” he says. “The right thing to do is to increase funding to the state and make sure Medicaid is fully funded.”