More on Budgeting

Less funding, reimbursements cut deep

Connecticut hospitals anticipate "devastating" budget cuts

While Connecticut’s 2014-2015 budget has yet to be finalized, hospitals and healthcare systems in the state are claiming that Gov. Dannel P. Malloy’s proposed cuts of more than $500 million in hospital funding over the next two years would be devastating.

According to Stephen Frayne, senior vice president of health policy at the Connecticut Hospital Association (CHA), the proposed cuts (of which a majority includes the payments hospitals receive for uncompensated care) are in addition to approximately $100 million in immediate cuts to hospitals made in December 2012. Frayne said the state’s rationale for the funding cuts is that they expect hospitals to see a drop in uncompensated care as healthcare reform in the Affordable Care Act begins to kick in.

[See also: Connecticut first state to expand Medicaid coverage to new groups]

He contends that the cuts could severely damage hospitals' ability to provide quality care, particularly for low-income clients, noting that even when health reform goes into full effect, there will still be a large number of patients who won’t qualify for insurance. He added that substantial cuts in Medicare reimbursements are also expected over the coming years.

If the proposed cuts go through, Day Kimball Healthcare (DKH) in Putnam, Conn. is looking at a total of $12 million in cuts by 2015 – with $3.8 million coming from the December blow, said Robert E. Smanik, DKH president and CEO.

“Because the cuts were unanticipated in our current budget year, we’re in the process of trying to absorb those immediate changes,” said Smanik. “The proposed cuts, if upheld, will at the very least require this organization to reduce our ability to treat state-funded patients and affect our emergency department.”

Julie Drouin, vice president and CFO at DKH, added that while DKH had planned on expanding and modernizing their emergency department with financing completed and plenty of community support, the project has been put on hold due to the proposed cuts.

[See also: Connecticut lawmakers ponder possible life after ACA]

“Pending reductions to hospital programs and potential project delays will ripple throughout the economy in our region and across the state,” she said. “We worry that these proposed cuts will have an overall economic drag to the whole state.”

The proposed cuts are already causing hospitals to look at their employees.

Jill Groody Musselman, business development and communications officer at Sharon Hospital in Sharon, Conn., said that Sharon Hospital executives proactively put a temporary hold on merit raises for their employees.

“Our staff is fine with this decision, as opposed to layoffs. Eventually we’ll have to look at different service lines to cut or eliminate and could that mean job losses? Yes, and we don’t want to do that,” she said.

Bill Stanley, vice president of development and community relations at Lawrence & Memorial Hospital in New London, Conn., said across the state there will “undoubtedly be job losses numbering in the thousands for hospitals.”

“There is no doubt these cuts – if enacted – will result in downsizing and outright elimination of programs and services here at L+M,” he said.

While the proposed budget cuts are unfathomable to most hospitals throughout Connecticut, Matt Salo, director of the National Association of Medicaid Directors, said that hospitals across the country were not spared from severe cuts because states found that there were no other alternatives left in many cases.

“We had the government stimulus money for a while following the recession, but now that the stimulus is through, states are really scrambling to balance budgets,” said Salo. “It really left many in the position to balance their budgets out of changing the way we pay for hospital care, and you can either do that with a broad meat axe or with a lot of targeted rate cuts for specific providers. There isn’t really another answer.”

“Budgets are not commandments written in stone,” he added. “They are negotiable.”



[See also: Connecticut insurance commissioner criticized for allowing insurance rate hikes]