Economy may be bad news for hospitals

Candice Ferrette
The Journal News
December 31, 2008

Once thought of as recession-proof, health care providers are now saying they aren't immune to the downturn in the economy.

Health care cuts in Gov. David Paterson's proposed state budget come at a time when hospitals, nursing homes and other health care providers are already hurting, they say.

They are seeing more patients without insurance - a likely result of rising unemployment - and less with the money or credit to pay out-of-pocket costs. Private insurance payments are also dropping, as elective surgeries are down, too.

"It isn't like the hospitals in New York state were enjoying a weekend at the beach and then this financial crisis hit," said Joel Seligman, chief executive of Northern Westchester Hospital in Mount Kisco. "There are some hospitals in our area that won't survive this. For some communities, that is very scary."

Under Gov. David Paterson's proposed budget, state health care providers stand to lose more than $2.5 billion in state and matching federal aid over the next 15 months, according to the Healthcare Association of New York State.

Medicaid spending would rise by about 1 percent under the plan, but spending for hospitals, nursing homes and other health care providers would be cut by more than $1 billion.

Under the plan, for the 2009-10 fiscal year, Westchester Medical Center in Valhalla would lose about $30 million; Blythedale Children's Hospital in Valhalla would lose almost $11 million; Sound Shore Medical Center of Westchester in New Rochelle would lose $4.2 million; Good Samaritan Hospital in Suffern would lose $7 million; and Nyack Hospital would lose about $5 million, according to a report from the Healthcare Association of New York State.

But for other hospitals, the impact seems minimal, and a few hospitals may gain money under the proposed plan. In general, hospitals that offer more out-patient procedures will fare better.

St. Joseph's Medical Center in Yonkers would gain $1.5 million; Hudson Valley Hospital Center in Cortlandt could get $324,000; and the Riverside Health System, which owns St. John's Riverside Hospital in Yonkers and recently acquired the Community Hospital at Dobbs Ferry, would get $764,000

Overall, however, the hospitals in the Lower Hudson Valley, which combined lost a total of $11 million last year, say these cuts will be much deeper.

Lower payments from the state and federal health insurance plans especially threaten programs aimed at helping the elderly, disabled and the very young who rely on Medicaid.

Less money to spend year over year means less growth in health care both here and nationally, industry analysts predict.

A survey by the American Hospital Association, which included 736 hospitals nationally, indicated that many hospitals were further downsizing to weather the tough economic times this year. About 60 percent of the respondents said they would be cutting administrative costs, 53 percent said they would be reducing staff and 27 percent said they would reduce services.

"There's no such thing as a Medicaid nurse. All the nurses take care of everyone, " said Jim Foy, chief executive of St. John's Riverside Hospital in Yonkers and chairman of the Greater New York Hospital Association. "But how the hell are we supposed to plan to take care of people when we don't know what we're going to get paid and we know that we are going to make less?"

Uncertainty is another factor.

The specifics of what the cuts mean for each hospital is still unknown.

The state cut health care spending twice this past year, in April and in August, so some health care officials say they are worried that they haven't seen the end of the cuts and want to be prepared.

At Westchester Medical Center, where 25 percent of revenue is from Medicaid, administrators failed to propose a budget to the hospital board earlier this month, Chief Executive Officer Michael Israel said, largely because they are struggling to close a deficit in excess of $60 million.

"This is as bad as I've ever seen it. This is really, really bad," Israel said.

The hospital's management is reviewing where it can cut expenses. Programs will close, job vacancies will go unfilled. But, the medical center's managers will not make across-the-board cuts that will negatively impact patient care, Israel said.

Cutting programs may mean health workers could get laid off in the region. The medical center is one of Westchester County's largest employers, with more than 4,000 workers.

"Hospitals are huge economic engines of their communities," said Neil Abitabilo, president of the Northern Metropolitan Hospital Association. His group represents community hospitals and other health care organizations in the Hudson Valley.

Abitabilo said he hopes the $4 billion in Medicaid funding the state expects to get from the federal government doesn't go into the state's general fund but is put back into the state's health care fund. The money is part of the economic stimulus package that President-elect Barack Obama has promised to push through early in his administration.

Before that happens, Abitabilo said, hospitals, nursing homes, visiting nurse services and other providers of health care will be forced to make the changes to close their own deficits.

Some say they have reduced their staff so as not to cut into patient care, but it has been difficult.

"There's nothing left to trim without getting to the quality of care and the quality of the services that residents deserve," said Judy Feinster, administrator of the Dumont Masonic Nursing Home in New Rochelle, which already laid off office workers in the past two years.

The not-for-profit nursing home relies on state and federal funding. About 80 percent of the home's residents are on Medicaid, Feinster said.

Others, like Foy, want to see companies that profit from the health care system to pay their share.

"I'm talking about pharmaceutical and technology companies to start with," Foy said. "Why do they get away scot-free?"

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