Hospitals face bleak budget fate

Published 11:19 pm Thursday, February 18, 2010

Virginia’s medical community was reeling Thursday in the wake of Gov. Bob McDonnell’s budget proposal, which calls for an additional $300 million in reductions to health-related programs.

Local health care providers are unsure what the exact impact would be in Suffolk, but they said the proposed cuts could result in the loss of programs, services, jobs and even locations.

“I’ve never seen a cut remotely like this in magnitude,” said Howard Kern, president and chief operating officer of Sentara Hospitals. “I’m not sure how hospitals across the commonwealth are going to fare. It will likely impact hospitals with cuts in programs, outreach programs and ambulatory services.”

Former Gov. Tim Kaine had proposed about $400 million in reductions to Virginia’s health care programs, including Medicaid reimbursement. But his budget called for tax increases that McDonnell wants to avoid. The result is that health care providers that receive money from the state would lose a total of about $700 million in Virginia funding.

But health care providers warn that the problem is even bigger. For every dollar the state spends on its Medicaid program, the federal government matches it. Therefore, any cuts to the Medicare reimbursement program would have a doubled effect.

Also, according to the Virginia Hospital and Healthcare Association, an additional $140 million in state and local tax revenues would be lost as a result of programs being trimmed.

The effects would be particularly painful for the Children’s Hospital of the King’s Daughters, which has the highest percentage — 53 percent — of Medicaid inpatient days of any hospital of the state. The next closest provider is at 28 percent.

CHKD is the commonwealth’s only freestanding hospital dedicated exclusively to children and has a policy that no child is refused treatment because of the parent’s ability to pay.

“Any reductions in Medicaid payments will have disproportionate consequences for us,” said Amy Sampson, vice president of government and media relations. “We’re facing traumatic reductions in payments. Our children not only have nowhere to turn for care, but we have nowhere to turn to make up for the losses. We’ve already reduced employment and made cost reductions. More jobs, locations and the depth and breadth of services we offer — to all children in our region — will be affected.”

Knowing the hospital would face cutbacks in Kaine’s budget, CHKD officials tried to prepare for the losses by reducing 137 positions — a total reduction of $6.5 million — last year. Now, the hospital has turned to legislators in Richmond for an exception.

“Delegate [Chris] Jones has been very understanding and knowledgeable,” Sampson said. “We’ve been asking legislators to support a protection for CHKD, since we’re the only free-standing children’s hospital in commonwealth and the largest provider of Medicaid inpatient service in the state. We’re hopeful that will be in there.”

Virginia ranks 48th among the states for Medicaid spending per capita and 45th in Medicaid spending as a share of the state budget, according to the Virginia Hospital and Healthcare Association.

“What many people don’t realize is that Medicaid is very limited in Virginia,” Kern said. “It covers seniors in nursing homes who qualify, some blind and disabled, some women — particularly those who are pregnant — and kids. It does not cover other adults or people working below the poverty limit. Those people end up being charity care.”

Last year, Sentara provided $158 million in charity care in the region. But hospital officials said the reductions in funding could impact their ability to provide that care.

“It will put a significant impact on the inner city,” Kern said.

While Suffolk is no “inner city,” “Obici will definitely feel that. It has a huge community and service burden,” he said.

Leaders in the medical community said they will do their best to make their cuts invisible, but they are not optimistic.

“No cutback in the amount of paper clips or tape we buy can offset these kinds of numbers,” Kern said.