Medicare Cuts to Tennessee Will Have a $13.3 Billion Economic Impact

NASHVILLE, TN, Feb. 7, 2013—The Tennessee Hospital Association (THA) today released a study that projects the extended impact of $5.6 billion in Medicare cuts to Tennessee hospitals already in place. Coupled with other cuts being considered in Washington, these hospital reductions would have a $13.3 billion recessionary impact on Tennessee’s communities as the cuts are phased in over the next decade.  

Using a model widely relied upon by businesses and government agencies, THA estimates the state could lose more than 90,000 jobs over the next decade, and that reduction would result in Tennessee unemployment returning to the level that it was at the peak of the recent recession in June 2009.

“Tennessee’s hospitals are entering a serious fiscal crisis, the likes of which we have never seen in our history,” said Craig A. Becker, THA president, in remarks to the Associated Press-Tennessee Press Association Legislative Planning Session today at Nashville’s Doubletree Hotel. 

“Hospitals are very important to their communities in many ways that go beyond providing necessary services to patients. In most cases, they are one of the largest employers in their counties and a very large economic engine,” Becker said. “For our state to absorb cuts of this size and scope, without using every possible means to offset the cuts, will create a ripple effect, the likes of which Tennessee communities have never seen before.”

The study was conducted using IMPLAN, a model published by the Minnesota IMPLAN Group, Inc. (MIG), which is relied upon by more than 2,000 public and private institutions such as the U.S. Bureau of Economic Analysis, Duke University and Chattanooga Area Chamber of Commerce,  to name a few. The study breaks down the projected impact by county for all 78 counties in the state that have hospitals.

“Tennessee’s hospitals have two years of experience with the Affordable Care Act (ACA) cut phase-in and our projections of the Medicare reductions to hospitals have been accurate,” Becker said. “As these and other cuts continue to be phased in, the ability of hospitals to offset the cuts will become imperative. The ripple effect will touch every Tennessean, particularly those in rural counties.”

The full study and county-by-county breakouts are available at www.tha.com/tools/implan/.

IMPLAN originally was developed in 1976 by the University of Minnesota in conjunction with the U.S. Department of Agriculture’s Forest Service. 

Tennessee Hospital Association (THA): THA is the premiere organization in Tennessee that promotes and represents the interests of all health careers, hospitals and health systems. Established in 1938 as a not-for-profit membership association, THA serves as an advocate for hospitals, health systems and other healthcare organizations and the patients they serve. It also provides education and information for its members, and informs the public about hospitals and healthcare issues at the state and national levels. Additional information is available at www.tha.com.


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