Cuts May Curb Hospital Growth; CPH, MMH Officials Fear Impact Of State Budget On Care

MASSENA - Some hospital officials say Governor David A. Paterson's proposed cuts to health care could spell job losses and cutbacks in services at their facilities, while others say their ability to contribute to already struggling local economies will be threatened.

State legislators have been warning for months that the state's fiscal woes will mean tough choices, especially for health care and education, two of the largest areas of state spending.

Among Mr. Paterson's 2010-11 budget proposals are reductions in Medicaid reimbursements to hospitals and other medical care providers and an increase in the gross reciepts tax levvied on hospital profits.

According to the Healthcare Association of New York state, these cuts will total more than $479 million, on top of an estimated $2 billion in cuts previously made to hospitals since April 2008.

Each month of the new year has brought progressively worse news for Massena Memorial Hospital CEO Charles F. Fahd II, who was told in January the impact of the governor's plans on his hospital would mean a loss of about $66,000.

By February, those losses had swelled to $296,000 and by early March, MMH was facing a loss of $322,000, according to estimates released by the HANYS.

"Where it's all going to end, I'm not sure," Mr. Fahd said. "We can't continue to be cut financially and not expect that eventuallyit's going to impact patient care."

In the past year, MMH has seenprofits dry up as costs climb, outpatient registrations dwindle and the amount and number of unpaid medical bills written off at the end of each month continues to swell.

The hospital hoped to post profits eclipsing $2 million in 2009, but added just $500,000 to their coffers by the end of the year. In January, MMH posted a loss from operations of $76,000.

Mr. Fahd credits a number of local factors for the financial troubles, including a growing number of community members who have losttheir jobs or their health insurance, the ripple effects of the closure of the General Motors Powertrain plant, the idling of Alcoa's Massena East facility and even a stretch of several months of road construction near the hospital last summer, which discouraged many patients from scheduling procedures and tests that normally bring in revenues for the hospital.

But the MMH CEO says these local struggles make additional cuts from the state even harder to bear.

"This has the potential - if the impact stays at the $322,000 HANYS is projecting - to force the hospital to take a look at the services we provide and the number of positions we have here," Mr. Fahd said. "There are also lots of things we do for the community - free health fairs, screenings, support groups. All of those things cost money.

"If we continue to see downward trends in volume and these cuts from the state, we're going to have to take a more deliberate look at people, positions and departments."

Looming state cuts may also threaten the hospital's plans to pursue a multi-phase expansion project currently being reviewed by the state Department of Health.

The proposed Southeast Expansion would help MMH turn their double-occupancy patient rooms into private ones, add much-needed clinic and doctors office space and revamp an aging boiler plant - all actions the hospital believes are necessary to remain competitive with other medical facilities in the region.

But cuts to state reimbursements mean MMH will have to absorb a greater difference between the amount of money the state pays them for providing care to Medicaid patients and the actual cost of that care.

Mr. Fahd pointed out that a typical emergency visit actually costs between $350 and $375, but Medicaid only reimburses hospitals $140 for Medicaid patients who use ER services.

Hospitals end up absorbing the difference, using funds they may have otherwise used to invest in their facility, add services or create jobs to help fill the shortfall created by the state's underpayments.

Canton-Potsdam Hospital spokeswoman Rebecca J. Sutcliffe said one of the major consequences of such large cuts to health care is that it hampers the ability of local hospitals, which are some of the largest employers in their communities, to drive economic development and job creation.

Under the proposed state budget, CPH would lose an estimated $290,000 in Medicaid reimbursements and would have to pay $97,000 in additional gross receipts taxes on the patients they treat. All told, these measures will spell the loss of $387,000 for the hospital in the 2010-11 budget year.

CPH has pursued an aggressive physician recruitment program to attract qualified doctors to the area, Ms. Sutcliffe noted.

Bringing in new doctors often means bringing new families to the area, opening up new physician offices that create new jobs and more business in the community and giving patients better access to the care they need in a region where doctors can be scarce.

"If we don't have payment for our services from the Medicaid system, how can we continue to provide that kind of stimulus within our own community's economy," Ms. Sutcliffe asked. "The payment system is just not sustainable. It puts a real burden on hospitals."

While CPH does not anticipate having to cut jobs or existing programs even if the state budget is passed, Ms. Sutcliffe said the state cuts could jeopardize future growth, proposed projects and recruitment efforts.

"Our population isn't growing, but it's aging," the CPH rep said. "New services and improved services are needed. Medical science changes and we've been doing our best to change with it. But this is going to have a big impact. The numbers are grim."

At Claxton-Hepburn Medical Center in Ogdensburg, the cuts will add insult to injury. The community is embroiled in a battle with the state to keep the Ogdensburg Correctional Facility open, but cuts to the hospital's funding have the potential to threaten state jobs at Claxton-Hepburn as well.

Unlike many businesses, hospitals are in a difficult position, because while other businesses can refuse to provide products or services to those who cannot pay, a hospital is obligated to treat everyone regardless of a person's ability to pay, officials note.

"We are the safety net for the community and would never deny anyone the emergency services they may need," Claxton-Hepburn spokeswoman Laura C. Shea said. "But after that care, there is a cost involved, which the hospital ends up supplementing.

"We're already struggling with what we're being paid. Hitting us again is tough to make up."

According to HANYS most recent estimates, Claxton-Hepburn would lose $367,000 under the governor's proposed budget. Of that, the hospital would have to pay the state $132,000 in additional gross receipts taxes and would see a $235,000 reduction in Medicaid reimbursements.

If the fight to keep OCF open is not successful, Mrs. Shea said there is no way of knowing the toll that loss might have on the hospital, which makes the potential for such substantial cuts all the more daunting.

"Coupled with the potential of the Ogdensburg Correctional Facility closing, this will present a domino effect," Mrs. Shea said. "It's hard to put a finger on what taking another good-paying employer from this community will mean to the hospital."

Staff Reporter Matt McAllister contributed to this story.