Letter to ARH Stakeholders

1/21/2011

Dear ARH Stakeholders:

I would like to begin this letter by wishing you a Happy New Year and a 2011 filled with good health and much happiness for you and your family.

Last year was filled with many news reports about the economic state of our country and how “healthcare reform” will not only affect the provision of healthcare, but the overall economy. You can expect to hear even more this year as regulations and healthcare reform continue to be rolled out. Although our ARH hospitals are located in rural communities, they are not immune to these changes and are feeling the effects of them. With all the different issues out there, I am often asked what these issues really mean for our patients, local healthcare operations, and communities.

Here is a brief explanation of some of the major national issues that are touching our local hospitals:

• An unstable economy. While the overall economy in this country has improved slightly over the past 12 months, unemployment continues to be high. In addition, state and local governments across the country have huge deficits to deal with, thus having fewer dollars for basic services, including healthcare. The overall economy is negatively impacting ARH just as it is affecting every healthcare provider in the country. Unfortunately, I do not see this situation improving in the near future.

• Shortfalls in Medicare and Medicaid reimbursement, which means payments from these government agencies are far less than our cost to provide services to the covered patients. These shortfalls negatively impact the ARH system since we operate in an area with some of the largest uninsured and underinsured populations. This is particularly troublesome in West Virginia where the current Medicaid rates cover only about 65 percent of costs. The state of West Virginia has a Medicaid budget surplus at this time which has been achieved by continually underpaying healthcare providers. In addition, our Beckley ARH Hospital is not permitted to charge the same rates as our competition, which puts even greater financial pressure on us in West Virginia. In addition, Kentucky Governor Steve Beshear announced this week in a press conference that unless the General Assembly approves his plan to shift $166.5 million from next year’s Medicaid budget to this year’s budget, payments to healthcare providers for Medicaid patients would fall by 30 percent. A reduction of payments of this magnitude would be the equivalent of a $25 million loss annually to ARH and would result in drastic changes for our patients, employees, and our communities.
 
• Healthcare reform, which would broaden the population that receives healthcare coverage in 2014 through Medicaid. Unfortunately, to pay for this expansion, healthcare reform will cut billions of dollars in Medicare payments to healthcare providers, potentially resulting in the total dollars we receive not increasing, but actually declining. Furthermore, the healthcare reform law has required ARH and other employers to modify benefit plans to extend dependent coverage for adult children up to age 26, remove life time coverage limits, and provide benefits coverage without consideration of pre-existing conditions. While the merits of these additional benefits can always be debated by everyone in our society, the issue that we are dealing with today is how ARH and other employers will pay for these additional benefits. At this point, ARH has had no choice but to increase the costs that our employees are paying for our health plans, which is problematic for our employees, their families, and our communities.

As we work to continue to progress in the face of these challenges, ARH is fortunate to have a dedicated team of caring employees, talented physicians, and devoted volunteers that are proud to serve our communities. There is no question that our people in Eastern Kentucky and Southern West Virginia are the most important factor in our system continuing to grow and prosper.

In mid-February our goal is to enter into negotiations on a new collective bargaining agreement with the Southern United Nurses (SUN) and the West Virginia Nurses Association (WVNA), which represent approximately 750 of our registered nurse employees.

A successful resolution to negotiations with the SUN and the WVNA is necessary for the ARH system to continue to move forward in a positive way. ARH has been steadfast in our goal that our nurses continue to enjoy some of the most competitive wages and benefits in our region, while ensuring that ARH continues to be viable and sustainable. We will work diligently and transparently to negotiate a contract that is fair for all parties, competitive with the market, and enables ARH to continue to grow and compete with other healthcare providers in today’s healthcare market.

We want to keep you informed with the most up-to-date and accurate information about the status of these nursing negotiations. Throughout the duration of negotiations, we plan to communicate with you through letters such as these, and regular postings and updates on our online newsroom at www.arh.org/newsroom.

As the year progresses, we look forward to sharing with you the accomplishments of our healthcare system. While it is true that ARH faces the same financial uncertainty that now dominates healthcare providers across the country, I can assure you that ARH remains steadfast in our commitment to serve our communities.  We hope to expand our services and facilities so that, for generations to come, we can continue to offer quality care and service to the residents of Eastern Kentucky and Southern West Virginia.

Thank you for your support.

Sincerely,

Jerry W. Haynes
President and CEO
Appalachian Regional Healthcare

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