Maximize Nebraska’s Medicaid Directed Payment Program Funds for Hospital Financial Growth and Stability

Maximize Nebraska’s Medicaid Directed Payment Program Funds for Hospital Financial Growth and Stability

Author: Oscar Gonzalez, Vice President of Healthcare Banking

In today’s healthcare environment, costs rapidly outpace Medicaid reimbursements. Over half of Nebraska’s hospitals are running negative operating margins, particularly in rural areas.

To help, Nebraska has established a Medicaid directed payment program under the Hospital Quality Assurance and Access Assessment Act, Legislative Bill 1087. Signed into law on March 29, 2024, the initiative will help alleviate Medicaid shortfalls by bringing in an estimated $1 billion more in federal funding to the state’s hospitals.

While the initial windfall will be necessary to cover past funding gaps, what happens once negative margins are padded, and operating budgets see a positive turn? Hospitals should consider investing excess liquidity to fund the future, and FNBO can help. We bring a broad base of healthcare banking experience, as well as expertise in financial products and investing, to help hospitals put money to work for them.

FNBO and Hospitals Work Hand in Hand

As one of the largest privately held banks in the United States, our guiding principle is to provide the service of a small hometown bank, while offering the breadth of services and capabilities you can find at a large, national financial institution. FNBO also has a full-time Healthcare Banking team that focuses solely on healthcare all day, every day.

The Healthcare Banking team regularly partners with healthcare provider organizations on programs that turn cost centers into revenue generators. We understand the pain points hospitals experience and work to create products and services designed to ease workflow inefficiencies and improve the healthcare revenue cycle.

As red ink turns to black on hospital income statements, it’s important to have a solid investment strategy. While excess cash is a sign of financial stability, it can also point to untapped revenue potential. We support healthcare organizations with investment guidance designed to fund the future, while ensuring positive and enduring cash flow.

Our capital management group works with hospitals to invest excess cash, generating income and financial reserves that can later be used to fund capital improvements or to withstand periods of disruption. This level of healthcare and financial experience is vital to hospitals looking to make the most of directed payment program funding.

Supporting the Healthcare Community and Beyond

FNBO understands that financial institutions play a critical role in supporting the economic and social fabric of our communities. As we strive to play our part, we support many programs designed to enhance the financial wellbeing of the communities we serve, including:

• Boots on the Ground: Our city ambassadors work locally to help us improve products and services, while also identifying areas where FNBO can contribute toward creating vibrant and accessible communities. Three such examples include a significant capital contribution to the Bryan Cancer Center in Lincoln, a contribution to the Columbus Community Hospital Foundation and a multi-year commitment to the Fremont Health Foundation.
• Service and Volunteerism: FNBO and its employees regularly contribute to communities as the bank curates volunteer opportunities based on focus areas that include affordable housing, workforce development and financial literacy.
• Philanthropic Contributions and Community Investments: FNBO provides financial support to the communities it serves through donations and sponsorships, impact grants, and capital and major gifts. Nearly $5.1 million were invested in Nebraska in 2023, with $263,900 going toward healthcare-related organizations and events.
• Impact Investing: Our goal is to invest in our communities in a way that provides a lasting and measurable impact. For example, over the last two years, FNBO has financed $4.5 billion in small business loans for low-to-moderate income entrepreneurs and purchased $600 million in goods and services from women-, veteran- and minority-owned small businesses.

Supporting the financial wellbeing of our state’s hospitals is an important link in this chain. By helping hospitals to grow excess liquidity accrued through the Medicaid directed payment program, we’re assisting in the mission of ensuring access to quality healthcare for people of all income levels.

To learn more about how FNBO can support your hospital and put Medicaid funds to work for you, contact our Healthcare Banking team today.

About the Author

Oscar is the Vice President of Healthcare Banking at FNBO, where he joined in 2007 and has held numerous commercial banking positions. He grew up in Mexico City where he attained his Bachelor's in Economics and interned at the Central Bank. He then moved to Spain and obtained his Master's in Banking and Finance, and finally moved to the United States and received his MBA with a concentration in corporate finance.