Trying to weave the way to a ‘rational’ decision on Medicaid

“The strategy is to help Missouri policymakers craft a solution that they believe and the voters believe is Missouri-specific.”

Since July, Charlie Shields has served as CEO of the two-hospital Truman Medical Centers in Kansas City, Mo., the area’s safety net hospital system, succeeding longtime CEO John Bluford III. Truman suffered operating losses in 2013, with a -3.4% operating margin on operating revenue of $459.5 million, compared with a -1.5% margin the year before, according to Modern Healthcare’s financial database. Shields previously served as chief operating officer of the system’s TMC Lakewood hospital. Before that, he served as Republican leader of the Missouri state Senate. Modern Healthcare reporter Steven Ross Johnson recently spoke with Shields about his efforts to persuade his former GOP legislative colleagues to expand Medicaid and what would happen at Truman if they don’t. This is an edited transcript.

Modern Healthcare: How will your experience as a lawmaker affect how you carry out your duties as a CEO of Truman?

Charlie Shields: In an organization like Truman, which is a true safety net hospital, the reality is that the vast majority of our payer sources are connected to government or public policy in one form or another. So there’s a lot of interaction between us and the local government, state government and federal government. Understanding both worlds of how government budgets are made, how laws are made, and understanding the healthcare business puts me in a little bit of a unique position for an organization like Truman.

MH: Why do you favor Medicaid expansion under the Patient Protection and Affordable Care Act?

Shields: The Affordable Care Act takes a disorganized system of giving care through disproportionate-share payments to safety net hospitals and other charitycare providers and moves that into a more organized, rational system of expanding insurance coverage through the exchanges and Medicaid. Then the Supreme Court ruling came along that kept the DSH cuts but made Medicaid expansion optional for the states. That created the perfect storm. If you move the charity-care population into Medicaid, you would eventually see a lowering of your cost structure as people move from chaotic episodes of care into more organized care. Eventually, you would begin to bend the cost curve. That’s one of the arguments you try to make to policymakers.

MH: How have your conversations gone with your former Republican legislative colleagues who have opposed Medicaid expansion?

Shields:

I’ve been in their shoes and I know the dilemma they’re in. The public perception of the ACA is still very negative. I think in their heart of hearts they know it’s a rational decision to expand Medicaid, but they also know it’s politically very risky because it’s perceived that if you vote for Medicaid expansion you’re endorsing the ACA. I try to help them work through that and create something that looks like a Missouri solution that works best for the people of the state.

MH: Does your role in the healthcare industry give you a

different perspective on the ACA from your fellow GOP lawmakers? Shields: Absolutely. If you work in this business, you see that uncompensated care tends to be very chaotic. People who lack primary care wait until they get to an acute-illness stage before they come to us. You see that every day in a safety net hospital and you realize that if people had access to coverage and primary care and all the things that come with Medicaid expansion, you wouldn’t see so much expense on the back end with our patients and see them in very bad conditions. You’d actually begin to improve health outcomes. Serving in a hospital CEO role and visiting with patients and making rounds in the emergency department, that is a perspective you don’t get as a lawmaker.

MH: What’s your strategy for selling the idea of Medicaid expansion?

Shields: The strategy is to help Missouri policymakers craft a solution that they believe and the voters believe is Missouri-specific, tailored to the needs of this state. The tremendous advantage they have right now is that as you

go into the last two years of the Obama administration, HHS will be extremely flexible on waivers as they try to get more states into the Medicaid expansion. So I tell policymakers they have a unique opportunity in a relatively short time frame to take advantage of this and craft something that works for our state, but also takes advantage of the financial resources available through the ACA.

MH: Do you see Missouri adopting a private plan model for Medicaid expansion like Arkansas’?

Shields: I think that’s exactly right. If you look at Arkansas, do you go into a voucher system where you give people the opportunity to buy into the Medicaid system? I think those are options that would actually sell well to Missouri voters, and I think that’s exactly what the Legislature needs to be looking at. You’ve seen states that are very conservative take advantage of that opportunity and that flexibility with HHS.

MH: If Medicaid expansion doesn’t take place in Missouri, what will be the impact on Truman?

Shields: Can you sustain yourself over time? Looking out in the future without expansion and with the reform law’s DSH cuts, that’s a difficult position. We know we’re in a tough bind. In Missouri, we’ve seen two hospitals close already. So it becomes a critical discussion. I tend to be an optimist. I think about how do we make it happen.

MH: What would be your plan if Medicaid expansion doesn’t take place?

Shields: Unfortunately, looking at the size of the DSH cuts, we couldn’t sustain the services we provide now, and that would have a dramatic effect on Kansas City. Truman provides the vast majority of behavioralhealth services, services related to chronic disease management, a lot of the primary-care services, and 300,000 outpatient visits a year. It’s hard to imagine how we would be able to continue that given the magnitude of the DSH cuts that are looming.

MH: If you had to cut behavioral-health services, what impact would that have on access to care?

Shields: We operate two community mental-health centers, 66 inpatient behavioral-health beds, and a behavioral-health emergency department. That’s a system that serves this community very well. People in crisis come to that behavioral-health emergency department by themselves or they’re brought in by law enforcement. I don’t think anybody in Kansas City would want to begin to imagine what would happen if that service goes away. When you get rid of inpatient beds, we all know the result of patients who no longer have access to those services. That’s one of the messages we talk about with policymakers. This is a rational low-cost system that is very much at risk without Medicaid expansion.

MH: What is the likelihood of expanding Medicaid?

Shields: It’s a challenge. Somehow you have to weave your way to a rational decision, and to do it in a way that lowers the political consequences.