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North Carolina Hospital Closes, Citing No Medicaid Expansion

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NORTH CAROLINA MEDICAID EXPANSION
One North Carolina town is waving goodbye to its local hospital, partly because Gov. Pat McCrory (R) won't expand Medicaid under President Barack Obama's health care reform law, the company behind the closing hospital said. | Robert Willett/Raleigh News & Observer/MCT via Get

A small hospital in a coastal North Carolina community will close its doors within months and its parent company says Gov. Pat McCrory's (R) decision not to expand Medicaid under President Barack Obama's health care reform law is partly to blame.

Vidant Health, a nonprofit 10-hospital network, will shutter the 49-bed Vidant Pungo Hospital in Belhaven, about an hour's drive east of the chain's Greenville headquarters, within six months, the company announced this week. Other considerations, including outdated facilities, also led to the company's decision to close the hospital but North Carolina foregoing the Medicaid expansion contributed to the decision, Vidant Health CEO David Herman told The Huffington Post.

North Carolina is one of 26 states where Republican governors or state legislators have rejected the Medicaid expansion. The expansion is intended to provide health benefits to anyone who makes up to 133 percent of the federal poverty level, which is $15,282 for a single person this year.

As a result, the states will turn down billions of federal dollars and millions of poor residents in these states will remain uninsured even after Obamacare's coverage expansion takes full effect next year.

McCrory signed legislation in March blocking the Medicaid expansion and the creation of a state-run health insurance exchange in North Carolina, citing cost and other factors.

The hospital industry nationwide has lobbied state lawmakers and governors to adopt the Medicaid expansion as a way to reduce the burden of medical bills that go unpaid when poor patients can't afford their treatments. Nationally, hospitals provided $41.1 billion in so-called uncompensated care in 2011, according to the most recent data from the American Hospital Association.

The issue is more urgent for hospitals because the health care reform law partially finances the Medicaid expansion and other new spending by reducing current funding streams for hospitals that treat large numbers of poor and uninsured patients, Herman said. Vidant Health's uncompensated care tab was $159 million in 2012, equal to about 10 percent of the company's revenue, he said. North Carolina hospitals will lose out on more than $5 billion in federal funding over the next 10 years, he said.

Vidant Pungo Hospital takes care of many low-income patients, Herman said. "Eastern North Carolina is a very poor part of the country and a very poor part of the state of North Carolina," he said. The hospital loses more than $1 million a year, he said.

The lack of a Medicaid expansion was just one component of the decision to close Vidant Pungo Hospital and the company would have made some change anyway, Herman said. He explained the factors that led to the closure to local reporters earlier this week, the Daily Reflector in Greenville reported Thursday.

"It's a 60-year-old, aging facility, it's right on the shores of the sound and it's literally at sea level and needs to be evacuated every time severe weather is predicted for that area," Herman told HuffPost. "It's gotten to the point where the cost of that investment just to keep the hospital maintained and open is becoming higher and higher because of its location and because of the age of the facility."

But the money that would've come in via patients obtaining Medicaid coverage would have provided Vidant Health with more financial flexibility, Herman said. "Would we have had more options if we had Medicaid expansion? I think the answer to that would be yes. Would it have been enough to replace that with another hospital or a standalone emergency room? The answer to that is uncertain but probably unlikely."

Along with announcing the closure of Vidant Pungo Hospital, Vidant Health unveiled plans for a 24-hour clinic in Belhaven within 18 months, which Herman said also will lose more than $1 million a year. But the company is suffering from a backlash in the community.

"We have a greedy nonprofit doing immoral things," Belhaven Mayor Adam O'Neal said to WNCT-TV in Greenville. Local residents protested the closure outside the hospital after the decision became public, the television station reported Friday.

The health care law, called the Affordable Care Act, calls for Medicaid to be expanded in every state and for the federal government to cover the full cost the newly enrolled beneficiaries from 2014 through 2016, after which the federal share gradually declines until it reaches 90 percent in 2022 and future years. The Supreme Court ruled in 2012, however, that states could opt out of the Medicaid expansion. So far, the District of Columbia and 24 states, including seven with Republican governors, will broaden Medicaid next year.

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