New Mexico law aimed at supporting access to hospitals offers limited help to the highest-need facilities, LFC says

SANTA FE, N.M. (KRQE) – Earlier this year, New Mexico lawmakers approved a law to boost healthcare across the state. Now, a close look at the impacts of the bill shows that the smaller hospitals are going to be getting a small share of the help, while larger, more profitable hospitals will get more cash under the new law.”New Mexican hospitals had a net revenue of over $334 million in 2022. Concurrently, they are receiving unprecedented subsidies from both the state and federal government,” Allegra Hernandez, a senior fiscal analyst with the Legislative Finance Committee (LFC), told lawmakers in a meeting on July 1. “The state subsidies have an uneven financial impact and are likely to help hospitals that are larger and more profitable than hospitals that are currently experiencing negative profitability.”

“This act is not equitable in which hospitals receive how much money. And so it’s not actually targeting hospitals that are at risk of closure,” Hernandez added. And that’s more or less by design.

New Mexico recently approved the Healthcare Quality Delivery and Access Act as a way to try to improve the quality of care at hospitals. Funding through the law is tied to how many non-Medicare patients each hospital has along with their quality of care. The result is that already-struggling hospitals get smaller payouts than those that are already succeeding, a new report from the LFC said.

For example, Rehoboth McKinley Christian Hospital was operating in the red by nearly $20 million in 2022, the LFC noted. Under the Healthcare Quality Delivery and Access Act, the hospital will get a bit over $6.5 million. “This will not cover the full extent of the losses that Rehoboth faces,” the LFC said.

The report notes that other hospitals, like Eastern New Mexico Medical Center – which actually increased its finances in 2022 – will receive more than $37 million from the Healthcare Quality Delivery and Access Act.

In essence, the Healthcare Quality Delivery and Access Act doesn’t ensure that several hospitals in New Mexico remain profitable. And a handful of other hospitals that are on the financial edge might not get enough of a boost to remain stable, the report said.

The upside is that the Healthcare Quality Delivery and Access Act is tied to the performance of a hospital’s operations. So, lawmakers and regulators could use the act to ensure that hospitals do improve their quality of care (as long as they are able to keep the lights on), the LFC said. But lawmakers need to revise the performance expectations, Hernandez said.

Not everyone thinks that will work, however. “We need to change the paradigm. Healthcare should not be for profit. That’s getting us into trouble,” Rep. Eleanor Chávez (D-Abq.) said. “We need to figure out a better system.”

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