Minnesota health systems doing better financially, but bracing for Medicaid cliff


Negotiations continue after nurses in the Twin Cities and Duluth went on strike last week for a three-day strike. On Thursday, the Minnesota Nurses Association and hospital officials remained far apart, with nurses demanding a nearly 30 percent increase over the course of their next contract and hospitals remaining firm and just over 10 percent.

With a gap this big, the All Things Considered team wanted to step back and get a handle on how the state’s healthcare systems are doing financially at this stage of the pandemic.

Sayeh Nikpay, a health economist and associate professor in the Department of Health Policy and Management at the University of Minnesota School of Public Health, joined the show on Tuesday.

To hear the conversation, click play at the top of the audio player or read a transcript below. It has been edited for length.

At the height of the pandemic, we heard a lot about how healthcare systems were struggling financially from having to cancel many procedures. How do you feel about how they are now?

Yes, at the beginning of the pandemic, the situation was actually quite worrying because utilization was collapsing. And in our fee-based healthcare system, less service means less revenue.

So politicians stepped in, providing an unprecedented level of subsidies to hospitals over the course of the first year. Over $100 billion went to hospitals in the first few months of the pandemic. And if you add up how much has actually flowed to the hospitals in recent years, that comes to around 200 billion dollars.

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What we can see from the research is that these subsidies really got hospitals through the pandemic.

So if they’re doing better, why do you think they’re so cautious about salaries?

Well, some of those subsidies have been eliminated or they were one-off subsidies. And there are other types of subsidies that may not be in the form of payments directly to these hospitals; They took the form of things like expanding Medicaid.

So we have Medicaid in the state of Minnesota and in the United States, and it’s a workhorse when it comes to covering the uninsured. And we know that uninsured patients weigh on the bottom line for hospitals.

When the pandemic started, we expected a large number of uninsured patients. Instead, we have seen that policymakers’ actions to expand the Medicaid program were instrumental in bringing people who lost this employer-sponsored coverage because they lost their jobs into Medicaid.

The levers that policymakers pulled to make Medicaid more available, those levers will continue to be pulled until the public health emergency is over. Well, last time I checked, the public health emergency should be over sometime in October.

When it’s officially over, those levers will be released and about 16 million people nationwide are expected to lose insurance coverage. And that could be bad for hospitals.

What will 16 million people do if they are suddenly uninsured?

That’s a great question. So people rely on charity hospitals, they rely on government qualified health centers. So some people will continue to be cared for by the providers who are already caring for them. Only the care is no longer remunerated.

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But what we do know from Economics 101 — or at least Health Economics 101 — is that people who lose that insurance card are far less likely to seek out and care about providers.

So we hear a lot of criticism of executive compensation. How does this stack up from Minnesota’s health care systems?

So what we do know from data on nonprofit hospitals is that when you compare payments, on average, a CEO gets about eight times the salary that a hospital worker without a college degree would get [higher]. Whether that’s too much or too little really depends on the circumstances.

But I would say if you are a nurse and are coming out of this period of intense stress and potentially hazardous working conditions, you would look at the post-pandemic performance of hospitals and think it makes sense that they should share in some of those gains.

Because one thing the research is telling us is that many hospitals have ended up roughly where they were before the pandemic began. But there are some hospitals — including the local Twin Cities market, the Minnesota market — that are actually doing better than before the pandemic began because of these unprecedented subsidies.

So there has been a lot of talk about hiring travel nurses for the strike and for the pandemic. That’s a big expense so I would imagine some people would think why not just pay the nurses more?

So, travel nurses fill a very specific niche and tend to be temporary, right? I think this likely organization, hospitals, thinks differently about how they budget for traveling nurses than for the nurses who are part of the organization and – hopefully – will remain part of the organization for many years to come.

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Many hospitals are interested in upgrading and retaining nurses on their staff. So it’s hard to say if hospitals think the same way about these two types of nurses. But I can absolutely see why nurses would think that maybe the budget has more room to maneuver than the hospitals are saying.

What else do we have to think about in these negotiations?

One thing I always have to remember when I think about health care strikes is, you know, I’d better be careful not to end up in the hospital during a strike. We know from research that patient care tends to suffer somewhat during strikes. We’ll have to see what happened after this limited three-day strike. It sounds like the patients haven’t suffered a huge deterioration in the quality of care.

But what the research also tells us about unions, and healthcare unions in particular, is that they tend to improve quality. So even if you don’t think nurses get about a 30 percent raise, having a union benefits us all because it improves the quality of care in patient settings.



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