No Medicaid expansion will pinch Carolinas HealthCare

North Carolina's decision not to expand the Medicaid program is putting financial pressure on the state's largest hospital operator, the Charlotte Observer reported.

Michael Tarwater, chief executive officer of the Carolinas HealthCare System, told his board of directors earlier this week that the organization is facing an "overwhelming challenge" as a result of reduced reimbursements from government payers and "misguided policy initiatives."

Carolinas's operating profit and profit margin for the first half of 2013 are both down about 50 percent compared to the first half of 2012, the Charlotte Business Journal reported.

Tarwater said the system had been counting on Medicaid and commercial insurance expansion under the Affordable Care Act as a way to partially counteract its financial woes. However, a decision by lawmakers not to expand Medicaid eligibility, paired with a decision to put off penalizing large employers who do not provide coverage to their workers for one year will hurt the system's bottom line.

The impact of that has already forced another hospital operator, Vidant Health System, to close its hospital in Belhaven in the eastern part of the state.

"We're not immune from things like this," Tarwater said. "But fortunately we're standing right now on higher ground because of our strength...we remain determined to create value for our patients and maintain appropriate access even given the many pressures that we face."

However, Carolinas recently restructured its pension plan for its 60,000 employees in order to save money.

To learn more:
- read the Charlotte Observer article
- read the Charlotte Business Journal article

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