Hospitals in PA Face Worsening Financial Struggles
Nearly 75 percent of hospitals are operating at a deficit
HARRISBURG, June 10, 2009 – Witnesses at a state Senate Democratic Policy Committee today said proposed funding cuts to Pennsylvania hospitals would be devastating and force many hospitals to cut medical services, lay off workers and shut down.
Senator Richard A. Kasunic (D-Fayette/Somerset), who chairs the committee, called the hearing the “beginning of a legislative process to restore fairness and common sense to the Medicaid reimbursement process.
“Also, the legislature needs to begin tackling the tough decisions that will help restore the viability – and stability -- of our hospitals and emergency care providers statewide.”
Carolyn Scanlan, who serves as president of the Hospital and Healthsystem Association of Pennsylvania, described Gov. Ed Rendell’s $77.9 million cut in Medicaid reimbursement funding as “bad,” and the ensuing Senate Republican plan (Senate Bill 850) to cut an additional $201.6 million as “devastating.”
Scanlan noted that hospitals already receive 20 percent less in reimbursement monies than the cost of care. She said the GOP plan would cause the state’s 180 acute care hospitals to lay off approximately 6,700 workers.
She added that the funding cuts would be “very bleak” for rural and inner city hospitals that have a higher number of Medicaid recipients. Kasunic noted that rural hospitals are often a region’s largest employer – and only community source for a range of medical treatments and services.
Public welfare Secretary Estelle Richman agreed that Senate Bill 850 would “threaten the viability of Pennsylvania hospitals,” and said the state should leave no revenue or savings on the table. She urged that the state embrace revenue-generating programs such as the “Smart Pharmacy” program to save money.
Richman said that becoming the single purchaser of medications for the Medical Assistance program would allow Pennsylvania to receive discounts that are seven times greater than those available to the managed care companies, saving taxpayers $146 million annually.
Kasunic also questioned Richman over the fairness of the state’s base rate for determining hospital reimbursements. He said the state pays Medicaid reimbursement claims through an “antiquated, decades-old formula that has led to vastly differing reimbursement amounts for similar treatments.”
Richman agreed that base rates need to be updated to more accurately “reflect real time cost reports,” but said the state would need additional dollars to implement such a change.
Also taking part in the hearing were Senators Jay Costa (D-Allegheny), Wayne Fontana (D-Allegheny), Vincent Hughes (D-Phila.), Shirley Kitchen (D-Phila.), Sean Logan (D-Allegheny/Westmoreland), and J. Barry Stout (D-Washington).
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