Facing A Statewide Outcry The Health Care Industry Takes On Romney’s Budget

When officials from 75 hospitals descended upon the State House on March 13 with concerns about Gov. Mitt Romney’s proposed budget, it wasn’t the first time the governor has heard the pleas. But it was one of the strongest showings in one place at one time.


“We came to stress the urgency of these health care matters,” said Mark Tolosky, president and CEO of Baystate Medical Center, who spoke at the conference. “It was to sound the alarm across the state that these budget cuts, if fully implemented, are going to have a serious impact on the hospitals in our communities.”

For weeks, the Mass. Hospital Assoc. (MHA) has spearheaded charges that Romney’s budget severely threatens hospitals already stressed by the state’s system for health care funding.

“This budget will threaten the care that everyone in Massachusetts receives,” said Ronald Hollander, president of the MHA. “The governor’s spending plan will force unavoidable cuts to core services by hospitals in communities throughout the Commonwealth.”

Specifically, hospitals are concerned bout rising costs of caring for the uninsured, a situation they claim is not only ignored in the budget, but exacerbated by cuts in the state’s contribution to the uncompensated care pool. Medicaid rates which reimburse hospitals for only about 70{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of their costs, on average, have also gone unaddressed, officials say.

“We lost about $20 million last year providing care for Medicaid patients,” Tolosky said. “That’s our starting point. We’re already not getting fair payment and treatment from the state, even before you throw on other factors.”

And it’s not only hospitals sounding the alarm. Programs affecting nursing homes and other forms of elder care are also threatened, the governor’s critics say, while cuts in Medicaid programs will increase the number of Massachusetts citizens without health insurance to about 500,000.

This month, The Healthcare News examines what hospital administrators and other health care officials are saying about Romney’s proposals, and what they feel can be done to turn the tide.

Medicaid Muddle

Holyoke Hospital President Hank Porten laid out his concerns succinctly. He’s had practice, as the issues aren’t new ones.

“We’re already underfunded considerably,” he said. “We’re paid an average of 71 cents by Medicaid for every dollar of cost, and we’re being asked to further reduce that level.

“Our major concern is reductions in services,” Porten continued. “In our community, we’re heavily dependent on Medicaid and Medicare payments. In some communities, these rates might not be a big deal, but in ours, it’s a major situation.”

Hollander said that these rates, in addition to antiquated and wasteful regulatory requirements, do threaten the range of services hospitals are able to provide — and the quality of care afforded to each patient.

“People depend on hospitals to deliver their babies, provide emergency care, prevent disease, respond to disasters, and comfort their elderly parents,” he said. “Instead of supporting these vital institutions, Mr. Romney’s budget will result in emergency rooms being overwhelmed, cost shifting that will place even more pressure on insurance premiums, and service cuts that will affect everyone.”

The Massachusetts Medical Society (MMS) cheered the MHA’s actions in Boston.

“Our world-class health system is in critical condition,” said Dr. Charles A. Welch, MMS president. “Years of underfunding have placed our hospitals in dangerous condition, and also threaten the ability of our physicians to deliver care.”

That phenomenon — years of underfunding — strikes at the heart of the problem, Tolosky said. While he understands that institutions such as public education and individual cities and towns will see funds curtailed as Romney tries to repair the state’s shortfall, he asserted that no area begins the budget process in as much trouble as health care, which has been underfunded for a decade.

“In the early ‘90s, Medicaid paid us 93 cents on the dollar,” he said. “It still wasn’t fair, but we could get by. We’re in the hole already, and you can’t push us down much further. The MHA says that, a few years along, eight out of 10 hospitals will be in the red. I think some of us have to make some very difficult decisions about programs and priorities.”

Elder Care Crisis

Nursing homes, in particular, are feeling like the rug was pulled out from under them financially, said Jeffrey Goldshine, president and CEO of Commonwealth Communities, which operates 12 nursing homes across the state.

With facilities bleeding about $20 per patient, per day due to insufficient Medicaid reimbursement, the Legislature agreed last year to take two steps: increase Medicaid payments across all health fields by 3.6{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}, and give nursing homes an additional 3.5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} boost. That latter step would be taken via a ‘nursing home user fee,’ which would be funded largely with federal money.

This year, the Romney administration not only eliminated that 3.5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} increase to nursing homes — and kept the federal money for other uses, Goldshine said — but it decreased Medicaid payments by 2.7{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}. In all, what had been expected to be a 7.1{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} increase after last year’s actions will total 0.9{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} in the end, unless the numbers change.

Nursing homes are already struggling with double-digit percentage increases in fixed fees, from health insurance and workers’ compensation to snow removal and wages — which must be kept competitive in a nursing job market that is very advantageous to job seekers right now.

“All this is causing tremendous stress on nursing homes today, and that’s why companies are freezing wages and letting people go,” Goldshine said. “With 70{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of all revenue going to payroll, what choice do facilities have? They’re making some very difficult decisions, and it’s a real problem for patient care.”

As a result, nursing home workers and administrators will take their lobbying effort directly to the State House on March 25 to try to convince lawmakers to reverse the proposed rate decrease and reimplement the 3.5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} user fee.

Coverage Woes

While health care facilities, such as hospitals and nursing homes, say the budget cuts will impact patients in the end, many residents are about to feel a pinch right away, as the elimination of MassHealth Basic, a type of Medicaid, will cost 50,000 people their health coverage.

“These cuts will put community members’ health and lives at risk,” said Sonia Bouvier, director of Hampshire HealthConnect, a program based at Cooley Dickinson Hospital that links area residents with health funding options. “When people cannot get the medications or treatment they need, many will end up in the emergency room, some will become seriously ill, and others may die.”

With the April 1 date to end MassHealth Basic looming, Cooley Dickinson recently hosted a health fair for uninsured residents in an effort to enroll them into available public health coverage and care programs.

“We worry that the pending cut of nearly 50,000 people … will have a serious effect on the health of those people and their families,” Welch, of the MMS, said. “Medical research has shown that being uninsured leads to increased health problems.”

Cutting that coverage also strains hospitals, Tolosky said, leading to an increasingly severe cycle of lowered quality of care.

“The people who are disenrolled from MassHealth are going to need care somewhere, and they’ll turn to emergency rooms,” he explained. “If they don’t have a relationship with the delivery system or a physician, the wait will be longer in an ER.”

In addition, “it often turns out to be more expensive care,” Tolosky continued. That forces additional patients into the uncompensated care pool, to the estimated tune of $290 million, Hollander said — and that’s on top of the $215 million the budget already requires hospitals to pay into the program.

As a result, every patient in the hospital is affected: directly, by backups in the ER that strain available staff; and indirectly, because of the added cost the hospital must bear by paying for free care, which could affect staffing and resources down the road.

Searching for Answers

Repeatedly, administrators told The Healthcare News that they understand the dire budget crisis in which the state finds itself. But, as Goldshine pointed out, Massachusetts ranks 47th among the 50 states in Medicaid reimbursement, and it’s a situation that hasn’t been addressed by any administration for some time.

A greater focus on creative solutions is one way to save money, and administrators are presenting a few ideas. Goldshine pointed out that nursing homes discard medications every day when patients switch prescriptions or die. The state has a voluntary drug return program, but states that require such returns have saved millions of dollars, he said.

Porten noted that if the state mandated all insurers to use the same forms, sets of definitions, and processes — much like Medicare payment requirements — significant money could be saved. The state could also encourage the use of low-cost, community hospitals, both by Medicaid recipients and state employees, for routine services.

“I support the governor’s effort to balance the state budget and certainly wish him well in those endeavors, but I think there are ways we can reduce the cost of health care and not take it out of services,” Porten said. “I think if we put our heads together, we could find ways to save the state money and still find a way to provide high-quality services to our constituents.”

Hollander added that the state could use funds from its share of the national tobacco industry settlement to invest in health care, in turn generating federal reimbursement that can be used to preserve needed programs.

Such creative solutions would not only help patients, but would protect jobs throughout the state, Tolosky said. Currently, one of every seven workers in Massachusetts is employed in health care or a related industry, such as biotechnology, and those industries attract billions of research dollars.

“We’re big economic drivers, both in our communities and across the state,” he said. “We don’t think it’s a time to be impacting that entire sector of the overall economy.”

Hollander noted that Romney has spoken of “quality of life” and “revving the economic engine” as key administration priorities.

“Where is the recognition and support of the central role health care plays in both?” Hollander asked. “Health care has the ability to grow our economy with good-paying jobs, but not with the unfair, unsustainable economic burden this budget is placing on hospitals.”

Yes, hospitals are speaking out, as are nursing homes, physicians, and underinsured patients. Whether their voices provoke any change remains to be seen.