Arkansas Heart Hospital CEO Lobbies for Higher Reimbursement Rates Amidst Layoffs

(Amanda Cordell)

With his company laying off employees and closing rural clinics, Arkansas Heart Hospital CEO Dr. Bruce Murphy is lobbying for a law requiring private insurers to reimburse Arkansas hospitals comparably to hospitals in adjacent states.

Murphy, blaming the job cuts on low reimbursement rates, said fewer than 50 employees have been laid off by Arkansas Heart Hospital since the beginning of the year.

He made his plea for the new law in an interview with Arkansas Business in his Little Rock office last week. The legislation, the Regional Equality Health Insurance Act, would require health insurance companies to pay Arkansas hospitals at least the average base rate paid in the six bordering states.

“There probably are some obstacles; I’m sure there are,” Murphy said. “But Arkansas has had the lowest rates in the nation for a long, long time. And if we want good health care, we’re going to need to support our hospitals so that we can bring in the best and newest technology and continue to be able to hire the best doctors to come to Arkansas to work.”

Along with the layoffs, Arkansas Heart Hospital recently closed its clinic in Danville and consolidated it with its Russellville location. It plans to consolidate seven more clinics by July, reducing its roster of community clinics from 23 to 15.

“We have made a move to trim several of these satellite clinics that usually only met once or twice per month in those small, rural communities,” he said. Those clinics will be consolidated into larger clinics nearby that have more diagnostic imaging and diagnostic procedures “to actually give better health care to the new cardiology patient that comes to see us,” Murphy said.

He said the employees laid off were in lower-paying positions and the layoffs haven’t affected patient outcomes. Arkansas Heart Hospital has about 1,300 employees.

But he said some service lines or departments may have to close, and those are being evaluated. “We meet with each department each month to look at their budget,” Murphy said.

Another Crisis

“Health care is not the same after the pandemic as it was before the pandemic,” Murphy said. “And what most people don’t understand is that the expenses to hospitals have dramatically increased for wages, for benefits, for medical supplies, for pharmacy.”

He said that in each of those categories, the hospital’s expenses are up between 35% and 45%, far outpacing inflation. Meanwhile, reimbursement rates haven’t increased to meet the higher expenses.

Murphy said that last year, using public information, he discovered reimbursement rate differences between Arkansas Heart Hospital and other hospitals. Until 2021, hospitals had no idea what insurance companies paid other hospitals for their services.

That changed with the Centers for Medicare & Medicaid Services’ hospital price transparency rules. Hospital price transparency was designed to help patients know the cost of a hospital item or service. Starting Jan. 1, 2021, each U.S. hospital is required to provide clear, accessible pricing information online about the items and services they provide, although that clarity hasn’t been realized in every case.

A January 2022 report from the Congressional Budget Office showed the price variation among states for hospitals’ services for Medicare and commercial insurance. Arkansas was the lowest paid in both categories, according to 2018 numbers.

Massachusetts gets the highest average price, followed by New York. Tennessee is No. 3, according to the report.

Arkansas Heart Hospital is proposing a law in Arkansas to “correct the draconian low payments that the insurance industry is paying Arkansas hospitals,” according to a presentation that the hospital created about three weeks ago. The regional average that the legislation would require would be calculated by averaging base rate payments to five hospitals in each state, based on the information posted on the hospitals’ websites. Insurance companies operating in Arkansas would have to pay hospitals and clinics this average or more.

Murphy said he’s in the early stages of lobbying for the proposal and has been in talks with legislators.

Murphy said he wants Arkansas hospitals to be paid comparable to what hospitals in neighboring states receive. “I mean, is West Memphis so different from east Memphis in cost?” Murphy asked.

But Tennessee is No. 3 in the nation for the highest average prices for hospitals’ inpatient services while Arkansas is No. 50. “It doesn’t seem fair, and all you did was drive across the bridge,” he said.