Executives from Connecticut’s hospitals are asking lawmakers to “pause” and rethink the hospital tax and the promises that were made when it was first implemented.
They said Tuesday that if Gov. Dannel P. Malloy’s tax hikes and other budget proposals are approved by the legislature it’s only a matter of time before community hospitals, like the one in Bristol, closes its doors.
Kurt Barwis, president and chief executive officer of Bristol Hospital, said he’s losing about $200,000 per month despite all the efforts to make his hospital more efficient.
“I will literally default on my bonds within 12 months,” Barwis said Tuesday during a conference call with reporters. If all the cuts and taxes continue he estimated his hospital would close within three to five years.
Stephen Frayne, senior vice president of health policy for the Connecticut Hospital Association, said Malloy’s two-year budget proposal increased the hospital tax from $235 million to $270 million a year. Hospitals want the legislature to go back to the “original promise” where the tax would be collected and all of it, not just some of it, would be redistributed to the hospitals.
But the tax isn’t the only financial burden hospitals are dealing with. Hospital executives said they are also dealing with an increase in the Medicaid population at the same time as reimbursements haven’t kept pace with the cost of care. Collectively, the changes included in Malloy’s budget will cut funding to hospitals by $753 million, according to the Connecticut Hospital Association.
Marna Borgstrom, president and chief executive officer of Yale New Haven Health System, said Malloy’s budget is a “game changer.”
She said she’s concerned about the “massive cuts of Medicaid” because the Yale New Haven Health System provided care last year to 30,000 Medicaid patients. She said there’s this myth that once the state established the exchanges more patients would have private insurance. She said 80 percent of the people who receive insurance through the exchange were previously insured.
She said the charity care her organization has given away has grown from $32 million in 2010 to $92 million last year and that is during the period of implementation of the Affordable Care Act. She said during that same period bad debts have doubled from $22 million to $44 million.
“The hospitals are not looking for subsidies or handouts,” Borgstrom said. “We’re simply looking to be paid fairly for the services we provide.”
But no matter what hospital executives say Ben Barnes, Malloy’s budget director, doesn’t believe it.
Barnes said it looks like most of the state’s 28 hospitals are “pretty successful financially.”
He pointed to a revenue report, which shows the only hospitals losing money in 2014 were Windham, New Milford, Connecticut Children’s Medical Center, Milford, and John Dempsey. Some of the other hospitals have returns that would be the “envy of the for-profit world,” according to Barnes. Based on the most recent information from the Office of Health Care Access the hospital industry made $663 million through Sept. 2014.
“These guys are claiming poverty?” Barnes said. “The profitability of hospitals has almost doubled and it’s because of the Affordable Care Act.”
But hospitals executives disagree. They said Medicaid demand far exceeded the funding available to pay for that care.
Hospital executives said the Malloy administration in general has turned a deaf ear to their concerns.
When he testified in front of the Finance, Revenue, and Bonding Committee about the governor’s budget, Barnes was asked about why the administration would tax such a “virtuous” business like the hospitals.
“It’s like why do you rob banks?” Barnes said. “It’s where the money is.”
Peter Karl, president and CEO of Eastern Connecticut Health Network, which operates Manchester Memorial and Rockville Hospital, called the comments “insulting and uncalled for.”
“I’m not sure if he’s just out there feeling as though he can throw stones at anyone he wants, but he’s created a very adversarial relationship,” Karl said. “I’m disappointed in him. I’m disappointed in the governor whose turned a deaf ear to us.”
Karl said as a result layoffs have occurred and will continue to occur.
“I don’t know where the shared sacrifice came in,” Karl said. “There must be a plan somewhere in state government to close hospitals because there’s no way these hospitals can survive going forward.”
Hospitals are the largest employer in many of the towns and take care of the sickest people and “if the governor and his staff doesn’t care about that then hopefully he doesn’t get sick in a town that’s going to lose a hospital.”