Ten hospitals in New Hampshire recently joined a lawsuit that claims the state is violating the Medicaid Act by not giving sufficient reimbursement to hospitals for providing care to Medicaid patients. The state is cutting $250 million in payments to hospitals during the next two years, as part of the recently enacted state budget package.
Elliot Hospital in Manchester recently announced it would lay off 182 medical professionals, and corporate heads are tying this layoff directly to state payment reductions. Southern New Hampshire Health System (SNHHS) in Nashua announced it would lay off about 100 people. Eliot and SNHHS were the first to officially announce layoffs, but public statements and hints from other medical institutions’ officials suggest there will be more, perhaps many more. St. Joseph Hospital in Nashua also announced it would close two subsidiary companies.
On a political front, there’s some interesting messaging going on.
The state’s system of providing aid to hospitals was somewhat complex prior to the recent budget, but now it’s decidedly more complex. The result, simply, is that hospitals get a lot less money from the state. That may all be justifiable in the face of a tough budget season, but it also might play into the Democratic narrative that Republican leaders went too far during this past session.
Republican leaders, particularly in the state House of Representatives, are saying this was a year with a dire budget situation and that tough decisions needed to be made. They say there was a lot of pain to go around. If they haven’t already, they’ll say their hands were tied because of the Democratically controlled legislature’s spending habits during the previous two years.
“The governor and legislature have made a number of difficult fiscal decisions in order for state government to spend within its means,” said House Speaker William O’Brien, R-Mont Vernon, in a statement. “Every group received cuts in order to deliver a budget that balanced honestly, and the hospitals are one of many groups that will see less money.”
Wait, what was that? “The governor and the legislature,” was that right? So now Gov. John Lynch and GOP leaders are a team? The GOP would certainly like Lynch to be their teammate on this, to take some hits as well, that is. Lynch, on the other hand, would like to run in the opposite direction.
Colin Manning, Lynch’s spokesman, told the Union Leader last week that the budget proposed by the governor is “very different” from what the legislature passed. He said Lynch didn’t propose nearly the dramatic cuts to hospitals that the legislature did.
It’s true that Lynch proposed far smaller cuts to hospitals than were ultimately passed, but he still proposed cuts. In fact, when Lynch made his February budget address, he went so far as to single out state hospitals, suggesting hospital CEOs and administrators seemed to be doing rather well financially. There’s been no mention of hospital executive pay recently.
There’s probably no way to totally get around the perception that this budget is very much the legislature’s budget, but Lynch is still the governor and he let it become law. Sure, he really had no choice, since at best the GOP would have overridden his veto but at worst they would have made even deeper cuts.
And the GOP legislature doesn’t want to lose the perception that this budget is theirs. Republicans were elected en masse to bring fiscal sanity to the state. They said they did that, and any distancing from the budget ― and its consequences ― takes away from that achievement.
O’Brien said the alternative to these deep hospital cuts would be a huge tax increase for working families in the state. He called that move unacceptable.
Hospitals are doing their best to hold the state accountable.
“No one wants to see hard-working people, who have done nothing but perform their jobs for this community, suffer from a reduction in force brought on by the failure of the state to manage their own expenses,” said Doug Dean, Elliot president and CEO, in a statement. “We hold the state and every legislator accountable for what is taking place today. … The consequences of the state’s failure to pay us for taking care of the poor are truly devastating, particularly as the state changes its course from the past 20 years and walks away from needed matching federal dollars.”
SNHHS would be down $10 million this year. While the guess here is that this will hurt Republican leaders far more than Lynch, SNHHS did lump Lynch in with the legislature as having broken a promise to hospitals. Tom Wilhelmsen, SNHHS president and CEO, called it the most significant threat to the community’s health in his 23 years on the job.
On the jobs front
Hospitals are a lot of things to a lot of people, but one thing that sets them apart from the rest of New Hampshire’s economic situation is that they experienced growth even during the recent recession. With job creation perhaps the single most important thing in the minds of voters in New Hampshire and nationally, that hospitals are now laying off hundreds of workers ― medical professionals ― is not good news for anyone.
Expect Democrats to tie the job losses directly to Republicans, specifically in the framework that Republicans have done little or nothing to create jobs. Democrats spent the first part of this past session beating the drum that Republicans only cared about radical social legislation rather than the economy and jobs. Then Republicans did spend the brunt of their time on financial issues, specifically the budget. But losing hundreds of jobs because of a decision legislators made surely hurts the rhetoric that the GOP is in it for jobs.
Hospital executives are clearly painting this as more than simply cutbacks; they’re treating the reduction in payments as impacting the financial foundation of these institutions.
Medicaid reimbursement payments to hospitals were cut by $250 million during the next two years in the state budget that began July 1. Elliot Hospital will lose about $17 million in the first year. Along with laying off 182 individuals, Elliot closed one program and has cut expenses, including benefits. Yes, this is the same Elliot that just opened a brand new urgent care facility along the river in Manchester, a much talked about development that would bring lots of jobs and revitalization to the area.
Dartmouth-Hitchcock would be subject to a $40 million tax just this year, on top of $60 million it would lose in under-compensated care provided to Medicaid patients, according to a hospital press release.
Wilhelmsen oversees a medical facility that spent $24.9 million last year on 43,000 Medicaid and uninsured patients. He said in a press release last week the hospital would need to reduce its labor force and he expected changes to the behavioral health and pediatrics units.
Of course, if the courts rule in favor of the hospital, the state will need to re-find that $250 million and send it to hospitals. House Majority Leader D.J. Bettencourt, R-Salem, said in a statement that legislators would look for $250 million in more budget cuts in the event the courts do rule in favor of hospitals. He said leaders refuse to levy the money as a tax on citizens.