Citing tighter profit margins, the chief executive of the Mayo Clinic recently told his employees that the prestigious health system will prioritize the care of privately insured patients over those on Medicare and Medicaid.
That bold pronouncement by Dr. John Noseworthy — made in a speech to employees late last year — reflects the growing unease among hospital executives who are watching profits shrink due to steady increases in the number of government-insured patients. Medicaid, whose enrollment has increased dramatically under the Affordable Care Act, traditionally pays hospitals significantly less than commercial insurers.
“We’re asking … if the patient has commercial insurance, or [if] they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so … we can be financially strong at the end of the year,” Noseworthy said.
The Minneapolis Star Tribune reported his comments Wednesday.
The policy is being implemented at an uncertain time for hospital finances, with many executives concerned that the GOP’s plan to replace Obamacare could cause people to lose both private and public insurance coverage, forcing hospitals to absorb more uncompensated care.
But those pressures — and Noseworthy’s statement — predate the current debate over the law.
“There is this thought that hospitals treat whoever comes to their door, but this is a statement that lays out what happens,” said Christine Spencer, a health economist at the University of Baltimore. “It’s a surprise to hear it out loud like that, but hospitals, probably for decades, have engaged in these more subtle attempts to get privately insured patients over Medicaid or the uninsured.”
In a statement, Mayo Clinic representatives said that about 50 percent of their care goes to patients on Medicare and Medicaid.
“Balancing payer mix is complex and isn’t unique to Mayo Clinic. It affects much of the industry, but it’s often not talked about. That’s why we feel it is important to talk transparently about these complex issues with our staff. We will continue to discuss these complicated issues and work to find solutions that benefit our patients,” the statement said.
As a top hospital system, Mayo stands to lose big on the spread between public and private insurance reimbursement from those sources, said Harold Miller, chief executive of the Center for Healthcare Quality and Payment Reform. Mayo told STAT that it lost $546 million in indigent care and in unpaid Medicaid portions in 2016 and $1.8 billion in unpaid Medicare portions.
The health system’s market power gives it the ability to charge more for its services and command high payments from commercial insurers, a clout it can’t wield with the federal government. So, Miller said, in prioritizing those commercially insured patients, it is following the money.
“It’s a very lucrative thing for them to do,” said Miller. While it makes sense from business perspective, he said, it doesn’t help to solve the underlying problem of America’s sky-high medical costs. “True leadership would be to figure out how to deliver high-quality services at the lowest cost possible,” Miller said. “If institutions are simply going to say, ‘I’m not going to serve patients unless I get paid more,’ that’s only contributing to the problem.”
The hunt for higher-paying patients plays out in all sorts of ways, experts said. A medical center may locate its satellite offices and target its advertising in wealthier suburbs. Hospitals might reduce emergency room services so they do not have to handle the chronic yet untreated issues — such as diabetes or high blood pressure — that regularly bring people without insurance to the hospital.
Mayo’s policy would not apply to emergency care, and Noseworthy said that Mayo will continue to take all patients, regardless of their ability to pay. He said the change would affect only a small number of patients, and only in circumstances when government-insured individuals and those with private coverage are seeking care for similar medical problems at the same time.
Mayo operates facilities in Minnesota, Arizona, and Florida, and has reported increases in unreimbursed costs related to Medicaid patients in recent years. The disparity in payments between commercial and government insurers has grown wider under the Affordable Care Act, which reduced Medicare reimbursements and instituted penalties for readmissions and poor quality. It also changed the mix of patients hospitals see by increasing the number of Medicaid patients. In Minnesota, the Medicaid rolls have expanded by 300,000 people.
While having more paying patients is generally a good thing for hospitals, it can also exert financial pressure on hospitals that serve high numbers of Medicaid patients, because government reimbursements are lower and do not cover all billable costs. Experts said the gap between public and private reimbursement is ripe for public discussion.
Noseworthy said in his comments to employees that a recent 3.7 percent increase in Medicaid patients was a “tipping point” for Mayo. “If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,” he said, “so we’re looking for a really mild or modest change of a couple percentage points to shift that balance.”
Even if Noseworthy’s statement was a moment of honesty, Daniel Polsky, a health economist at the University of Pennsylvania, said it doesn’t mean he and Mayo should be chastised for their strategy.
“I don’t think they should be shamed for saying it,” he said. “I think there should be some public discussion about whether elite systems such as Mayo should provide equal access to all payer types. I don’t know the answer to that, but it’s a reasonable debate.”
Despite the increase in publicly insured patients, Mayo has still generated significant profits. Its income jumped to $612 million in 2013. Last year, however, income dipped to $475 million, translating to an operating margin of 4.3 percent.
We were refused appointment in memory disorder clinic…we have Medicare & supplement. Most patients with memory disorders are on Medicare!! Yet Mayo is turning away these patients in preference for private pay!! Why have such a clinic!?
It’s a business, not a hospital. Not what Mayo Brothers intended!!
Christus does the same thing. Their public relations people portray the little catholic non profit as if the treat the poor. The general public has no idea how they are exploiting the broken healthcare system to expand their operations into other countries, like Mexico. Of course they only treat the poor in highly publicized “outreach screenings” to prevent them from showing up at their highly profitable, high end hospitals. Some of the people they deny care to die, or suffer complications, but according to CHRISTUS that is fine, because Medicare and Medicaid pay for that. What this really means is that the taxpayers are subsidizing their operations.
We really need to look at these so called non profits and how they exploit Medicare and Medicaid patients, while enjoying tax free status.
At least he admits it. You really think other hospitals don’t do the same thing? Baptist, Ascension, HCA, you name it. I have worked in multiple ER’s, and Mayo is the only one I never saw violate EMTALA. If you rolled up to that ER with a bad brain bleed or ectopic, etc the only place you were getting sent was upstairs for emergency surgery, whether you had no coverage, Medicaid, or the highest tier Blue Cross plan. When I worked at a “safety net hospital”, the hospital that was worst in town about EMTALA violations was an Ascension hospital, which boasts about their Catholic charity mission all day long. They once sent us an ER to ER transfer w/o any conversation with our attending physicians or anything. They took the time to set up transportation with a private ambulance company and gather CT reports and disc, medical records to send with the patient, meanwhile this patient’s brain hemorrhaging severely & their life clock ticking. After the patient was already on the way to our facility, a PA calls and is like oh by the way we’re sending you a brain bleed bc we have no neurosurgeon on call. One of our physicians who previously worked at this hospital, called a friend and asked “What neurosurgeon do you have on call?” There were 2 sets of teams for neurosurgery (an NP, a fellow, and attending physician for each all on call). I highly doubt the hospital would have sent us this guy if he had private insurance…
Yes say it out LOUDbecause consumers are definitely aware of how “prioritized treatment” goes and as a healthcare worker it is disgusting and shameful that patients are cherrypicked… it is unethical , uncaring and has ALWAYS BEEN SOLVEABLE.
We know who is on government issued insured( the poor, the disabled, and disproportionately other marginalized groups). This is NOT NEW, but it does not make one feel very cozy about a system they have been apart of for 30+ years.
If you have the RIGHT kind of commercial insurance you are “entitled to better care and better options’ if not just die. And the US models itself as being the most civilized and humane country in the world. It is not!
ANY PT REGARDLESS OF RESOURCES SHOULD BE GIVEN THE BEST TREATMENT WITH BEST PRACTICE IF THEY ARE SICK.
Too bad we’re so CIVILIZED, I simply wonder what INHUMANE looks like?
My daughter was recently diagnosed with POTS. The nearest — and one of only three — specialist in the state for her disease is at Mayo. It’s also the only dysautonomia clinic in the state. I was told, flat-out, that the clinic does not accept Medicaid. Period. What is my 12-year-old daughter supposed to do?? She deserves treatment, just like anyone else!
What state are you in? Do some research. There is probably a good clinic or medical facility within reasonable driving range that can help your daughter and will accept Medicaid. I do not know precisely how the Mayo Clinic is registered with the IRS, but I do know they are a non-profit. If they are a 501 (c) (3) then they must be a charitable organization and I have serious doubts that they can legally deny you service if you are paying them through a charitable public organization such as Medicaid. I would check with an insurance attorney to make sure that what they are doing is within the rules laid out by the IRS.
Yes Madam your child has a RIGHT TO BEST TREATMENT AVAILABLE.
I can’t tell you how sick it makes me that your child was turned away because she has Medicaid.
Dr. Noseworthy and other physicians, healthcare systems, insurance, politicians have ABDICATED THEIR RESPONSIBILITIES OF THE PATIENT AND HEALTHCARE IT IS BUSINESS MAAM JUST BUSINESS.
I worked for big Pharma at one short time…. if they took ALL the bonuses that they give out EVERY PERSON IN THIS COUNTRY COULD BE COVERED W/O REGARD TO ABILITY TO PAY OR TYPE OF INSURANCE, as well as they decrease the outlandish costs of care, but healthcare is a political machine in this country and they do not care about your child….. IT IS DESPICABLE, but greed trumps everything. It is not enough that pharma and insurance don’t have recessions, drs don’t have recessions.
The US health system is the most unhealthy model in the world because of greed off the backs of sick ppl who can afford it, no prevention or early intervention model…. keep the drugs coming, damn money into more viable research, and damn poor ppl, the elderly, minorities, women etc.
There will be a reckoning of the utter audacity of the politized US HEALTH SYSTEM. It is simply another big business who the government has given individual status.
I regret the day I went in to healthcare. Because I believed in the ideals of helping ppl to be their healthiest selves and not watch big busy come in and corrupt it.
Many Blessings to find help for your child. I apologize wholeheartedly for the insult to humanity that they choose not to treat your child SHE HAS A RIGHT TO EXCELLENT CARE.
If you are in Arizona or FL, they don’t do pediatrics. I mean, if a kid comes in the ER, they can’t refuse them and have to stabilize them, but they otherwise, you are getting referred elsewhere, regardless of what kind of coverage you have. If you’re in Minnesota, Univ of Minnesota has an amazing children’s hospital. Mayo does do charitable care but it goes toward patients with more severe diseases, like cancer, cystic fibrosis, etc. For POTS, you should be fine simply going to a good neuro doc. It’s not like a brain tumor or muscular dystrophy.
I was told by Mayo in Florida that since I had Medicare as my primary insurance carrier they would not accept it nor would Medicare allow me to pay out of pocket. So basically I could not have there services since they would take Medicare or my BC/BS, or allow me to pay out of pocket. In other words I was SOL.
Every time I call medicare they say sure you can pay out of pocket. I think when medical providers say you’re not allowed to pay out of pocket they are doing that because they really don’t want to treat you at all.
This is a prime example of why medical care should not be for profit. Dr. Mayo would most likely be appalled. Hippocrates definitely would be.
Ron is right! I AM appalled. I am also appalled at the federal and state regulations that attempt to control the practice of medicine and make it safer for the public, the hundreds of thousands of dollars of debt that students must incur in order to become physicians, and the discontinuation of many of my sacred practices such as bloodletting, trepanation, and Mercury ingestion. Finally, I resent it when it is said that people who invoke my name in modern discussions of health policy are only showing their ignorance! -H
I absolutely agree with you about what you said about the founding doctors of Mayo Clinic. They wouldn’t recognize the place.
Thank You for sharing the true example of what I have tried to articulate and experienced in my diverse and personal experience of health care system and how it is managed and delivered. I ask people to look at the history of the establishment and how quality and priority has always had a profit plan in place and insurance, Medicare and Medicaid are all a Ponzi scam and medical students and providers are soldiers that are educated in school that is the link that history needs to be researched and rewritten to understand how the cartel and monopoly of organized heath care is branching out into a market that is using power and privilege to attract people who want the privilege and power that money can not buy if you are not as privileged or powerful as the MAN who is behind you or ahead of your need for care. If you think this is new it is not it is like the way the AAA American Automobile Association tried to monopolize new car maker Henry Ford to manufacture transportation for all, Not just the privileged, He had a design and ability to give same privilege better quality and for a affordable cost to anyone. The same with Rothschild control over oil and he shows deception and manipulation that we see in health care and business practices changing names and ownership titles to mislead government and people to think they just created shareholders and investors to pay him for use of privilege and power but not full control. He bought Government to establish standards and guidelines associations that claim are to protect people and quality of product is guidelines set up by board that Foundations like carnage and Rothschild control, They are a cartel protected by government funded by the people for privilege for basic needs welfare and charity is a market place mayo clinic used to establish foundation of trust and environment to educate and publish same technic and procedure practice of medicine and know that insurance and health care are established for profit they are first to open the true nature of the intent and priority investors used to create establishment. We demanded what we never were getting with the funds provide by Government and premiums from private insurance. This is a fact that medical students have a suside rate of 400 death per year, Why? They are bullied and made to follow a practice that you think follow oath to do no harm, I would think wanting to practice medicine is a calling and hope to heal the sick. Yes wealth and respect are what is glamorized. This is not true, Wealth and respect is promoted and exploited by policy and privilege to preform and practice by intentional desire to work for program designed for profit, Imagine work and dedication along with student loan the are another question to answer, is a stress and situation with power given that teaches you need to follow procedure, you owe us for future connection and practice you have no choice or credit, Government public do not see you or witness deception and compaction is the practice.performance and quality is not welcomed profit then quality is key to career choice. Live with choice to question duty expected follow you will not be accreted or develop connection to practice debt and bills need to be managed. Suicide is committed as a solution and direction I have been healing and understanding my fear and situation is more dangerous and insidious I can not even articulate the evil and corruption as a patient and human it kills me to accept a future for a illness is something even if I had money or welfare for service. I would ask myself is my care with do diligence, or denied because power or privilege, is agenda, compaction is the connection I noticed was connected your future to mine. My story my situation made see motive is reason to realize neglect and promotion of quality rises but money or privilege give justice to cover the virus that is spreading and infecting, it`s target, and people who work around it friends and family faith healers and patient in a bed in same hospital the visitors, regardless of desired profit and service MRSA is one secret I witnessed the lies and cover up. Helpless and hopeless is scary to a person regardless. I can relate to suside by a student who want to heal and give service. Debt and the obvious is endless. God says he will not give you more than you can handle. This is my conclusion and understanding of a senseless loss of good, And this is evil past and present you see in this message from mayo clinic. It is because people are aware of is taught and expected understanding is a view denied and established it is a this can not be true moment. Not a to good to be true.
My brother died in a filthy hospital and I mean literally. It was close to his house so his wife chose to send him there. They were both elderly and he had a broken tibia. They drained his knee 3 times and gave him a terrible infection that killed him. And they bullied him and treated him like hail the entire entire time he was there. I was there for only a few days and I saw how he was treated and I was horrified. There’s nothing you can say to them because if you say anything then thou be even worse. I never knew that nurses and doctors would actually literally bully I helpless patient who was unable to walk Was in terrible pain in was dying. I witnessed it with my own eyes. It didn’t register with me until later that this woman was bullying him she acted like she was joking but I was standing to her side and I could only see his face and he looked into her eyes and he looked down like a little child. Later I realized that she was torturing him right in front of May. What a blatant evil person. When I talk to him on the phone later he told me how when the nurse came in to clean him she heard him. I did not know what to do because I was in another state I could not be there to defend him. So now hes dead. He is out of his misery. But I am still suffering and always will because of the evilness of these medical people. They should not be allowed to practice in they should actually be charged and put in jail. How dare they. And I don’t care if put these sick people are difficult or not. When you’re old and you’re tired and you’re in pain and agony you can’t be a perfect person. But use that as an excuse to abuse the elderly and the ill. And they caused his death and they called his suffering by giving him a staph infection. Everybody talks about children being bullied at school and how terrible it is. everybody talks about people being bullied for their race for their sex and for their sexual preferences. But nobody speaks out at all for all the bullying that goes on and hospitals by medical personnel towards helpless patients. It’s time this horror stops because if you think for one moment you, if you are lucky enough to get older, are not going to experience this then you’re sadly mistaken. If we want to protect our own self then we need to stop this now.
Completely agree with the Mayo Clinic. It’s simply a matter of survival, and Mayo and other health providers cannot be expected to take on all patients
regardless of insurance reimbursement or lack there of. The original intent of the ACA was to destroy the private practice of medicine, and no one can convince me otherwise
What is your medical specialty, Dr. Emmer? Are you Internal Medicine, Oncology, Surgery, Cardiology, Anesthesiology, Obstetrics? When was the last time you saw or knew of an Adverse Event that resulted in Serious Harm or Death? Did you report it? If not, why not? When was the last time you or one of your colleagues “doctored” a patient’s medical record in order to ameliorate the chance of liability? These are all questions that I am far more interested in than whether the Mayo Clinic cooks their books to stay alive. They can survive or not, but do they kill people in the process without reporting the event?
Yes and because of the ACA doctors are punishing innocent people. I’ve been going to my doctors for 20 years and when I got medicare they continued to see me only because I was going to them for so long under other insurance. After the ACA 4 of them dropped me and stop taking people with medicare. It’s not our fault that after working a lifetime we are now on medicare. It’s not our fault that the president decided to come out with ACA. It isn’t our fault and yet we are the ones who are being punished and the having to go to doctors who are not board certified who are not fellows who have terrifying reviews. I live in a large city and I can’t even find a doctor at all in my area where I live that takes medicare. I have to drive 45 minutes and that gets harder and harder to do as you get older. I don’t see why hospitals and physicians have to make so much money that they become multimillionaires. Shouldn’t you be in this to help people not for the money? Sure you deserve a decent living and sure all the system needs to be fixed there’s a lot of issues that need to be changed but why don’t you get busy changing those things that rather than taking it out on innocent human beings.
I think that it is good that Dr. John Noseworthy said this. At least this is out in the open. The medical community has been denying care to the poor and elderly for a very long time. At least now that this is out in the open maybe just maybe they can find a solution to the problem. I can only pray.
Again the problem is the cost of medical care not its reimbursement.