The effects of TennCare reimbursement on disproportionate share hospitals in Tennessee

Chinyere Chigozie Ogbonna-McGruder, Tennessee State University

Abstract

The recession and rising health care costs experienced by many states in United States have led to the enactment or a move towards the enactment of legislation that would reform the way that health care is provided for and paid for within their states. The health care system reform plan implemented in the state of Tennessee on Jan. 1, 1994 is known as TennCare. The main objectives of the reform plan were to control the rapidly rising costs of the state's Medicaid program and extend health insurance coverage to most Tennesseans that did not have access to employer sponsored or other government-sponsored health insurance. Beneficiaries enrolled in competing, state chartered managed care organizations that are responsible for providing a broad range of inpatient, outpatient, and preventive services, for which they are reimbursed on a capitation basis by the state at a rate based on a statewide global budget for health care. This paper describes the design, rationale, benefits and problems of TennCare as well as interest groups' reaction and the policy actors involved in implementation of the state reform. The analytic focus of the dissertation is on the effects of TennCare reimbursement on disproportionate share hospitals in Tennessee. ^ All the hospitals within the state of Tennessee were included in this study. The main focus of the dissertation was on disproportionate share hospitals while the non-disproportionate share hospitals served as controls. Data spanning a ten year period were obtained from these hospitals. The data pertained to admissions/discharges, average median daily census and profit. Statistical analyses were performed on the data for the disproportionate and non-disproportionate share hospitals. ^ Results of the study indicate that TennCare implementation did not have adverse effects on average median daily census and admissions/discharges of disproportionate share hospitals. But TennCare implementation appeared to have an adverse impact on profit, of these hospitals. ^ Regression coefficients for average median daily census of disproportionate share hospitals, show that the trend up to TennCare implementation was a decrease of 3.1 patients per year. After TennCare implementation, there was an upward trend or increase of 2 patients per year. Regression coefficients for discharges/admissions of disproportionate share hospitals prior to TennCare implementation show a decrease of 64.5 patients per year and an increase of 59.5 after TennCare implementation. The upward trend or increase in median profit for disproportionate share hospitals prior to TennCare implementation was $105,193.46 per year. There was a downward trend or decrease in median profit of $150,512.5 per year after TennCare implementation. Thus TennCare implementation had an adverse impact on profit of disproportionate share hospitals, but positive impacts on average median daily census and median admissions/discharges. Because of the negative impact on profit, it is suggested that the study be replicated after a few more years to determine the long term effects of TennCare reimbursement on profit of disproportionate share hospitals. ^

Subject Area

Political Science, Public Administration|Sociology, Public and Social Welfare|Health Sciences, Health Care Management

Recommended Citation

Chinyere Chigozie Ogbonna-McGruder, "The effects of TennCare reimbursement on disproportionate share hospitals in Tennessee" (2000). ETD Collection for Tennessee State University. Paper AAI3007617.
http://digitalscholarship.tnstate.edu/dissertations/AAI3007617

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