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The Healthcare Investor Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Medicaid Budget Crunch Part IV: The Impact in Illinois

Posted in Healthcare Services Investing

In Illinois many doctors are eschewing Medicaid patients due to low reimbursements, a trend that will likely become critical in less than two years, when the numbers of Medicaid patients are expected to increase.  In just two years, some 611,000 Illinois residents will become eligible to receive Medicaid benefits, a 22% increase from current 2012 numbers. Recently, the Illinois General Assembly voted to cut $1.6 billion from the Medicaid budget, $14.3 billion for the current fiscal year. Each state sets its own Medicaid rates, with Illinois’ rates among the lowest in the U.S.

According to Deborah Edberg, MD, first vice president of the Illinois Academy of Family Physicians, “For a private physician…if you take too many Medicaid patients, you can’t keep your doors open.

As we discussed in Medicaid Budget Crunch & Its Impact on Healthcare Investing: Part I from a year ago, funding for healthcare programs, including Medicaid, has reached critical stages. Changes to eligibility as well as reduction to state Medicaid programs will, most likely, impact those sectors most dependent on Medicaid funding, such as the skilled nursing (SNF) industry.

As we pointed out in Medicaid Budget Crunch & Its Impact on Healthcare Investing: Part II, some healthcare providers are seemingly well-positioned to thrive even as both state and the federal governments amend Medicaid budgets, notably dialysis providers, preventive care/disruptive healthcare initiatives, primary care providers, managed-care organizations and health IT.

The uncertainty concerning healthcare in general and Medicaid in particular continue to dominate both the news and the thoughts of most Americans. It has now been one year since the end of the federal government’s enhanced Medicaid reimbursement rate to the states. This loss of federal funding has states clamoring for more ways to significantly reduce their Medicaid budgets. Unfortunately, as we proposed in Medicaid Budget Crunch & Its Impact on Healthcare Investing: Part III, many options available to the states to trim their Medicaid budgets will continue to deleteriously affect many healthcare providers.

With increasing demand and diminishing dollars, investments in many life sciences and healthcare sectors continue to perform well. It is, however, more important than ever for investors and providers to continue to scrutinize both present and future revenue sources to meet the opportunities and the challenges as they arise.

 

 

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