Malloy tells hospital executives, ‘It could be worse’

WALLINGFORD–Hospital executives have been bemoaning the millions of dollars in cuts they face under Gov. Dannel P. Malloy’s proposed budget, and on Monday, they got a chance to tell him in person.

But before anyone could describe their organization’s dire finances, Malloy pointed to his own.

“I want to say at the outset that I would trade my deficit for any one of yours today,” Malloy told hospital executives and trustees at the Connecticut Hospital Association headquarters in Wallingford.

Mally CT Hosp Assn 3-14-11

Malloy offers to trade deficits with hospital leaders

If the hospital officials were expecting the governor to commiserate about the pain they’ll face if his budget becomes law, they didn’t get it. Nor did they get an offer to reconsider any of the proposed cuts, although Malloy noted that his budget director remains open to hearing from them.

Instead, they got a chance to make their case and ask the governor questions. His responses had a theme: The state is worse off than you are. Everybody has to sacrifice. And although hospitals stand to lose millions of dollars in the proposed budget, they could have it worse.

Malloy acknowledged that his message was not what the hospital leaders wanted to hear.

“I also understand that people feel they need something and you all do and you’re going to make your best case, and I understand that,” he said. “But I go from place to place hearing everybody make their best case.”

“Everybody agrees with shared sacrifice until it comes to them,” he added.

Hospital leaders have said Malloy’s budget proposal gives them too much of the burden. Under his plan, they would lose $83.3 million a year in state payments meant to cover part of the cost of treating uninsured or underinsured patients. Malloy noted Monday that the funding would have been eliminated in 2014, and his plan simply removes it two years early.

It also calls for taxing hospitals. The projected $266.6 million raised through the tax would be returned to the hospitals: By taxing and then redistributing the money, the state can generate matching funds from the federal government. But the state must give some hospitals more than they paid and some less. Even the hospitals that receive more than they pay through the tax would ultimately lose money because of the cut in uncompensated care funding, according to the hospital association.

The administration has defended the proposals by noting that hospitals are receiving increased reimbursement for treating low-income adults in a new Medicaid program that replaced a lower-paying state program, although hospital officials say they still lose money treating those patients.

On Monday, Malloy said it could have been worse for the hospitals.

“We honestly bent over backwards to try to not have this industry get a larger portion of the pain, to tell you the truth,” he said.

Christopher Dadlez, president and CEO of St. Francis Hospital and Medical Center and chairman of the hospital association’s board, praised some of Malloy’s choices, including a plan to change the way Medicaid programs are administered and the proposal to provide Medicaid coverage for smoking cessation services.

Other hospital leaders told Malloy they appreciated the budget challenges he faced and appreciated his effort to discuss his proposal with the public.

But they also took issue with the proposal.

Kurt Barwis and Chris Dadlez 3-14-11

Bristol Hospital President and CEO Kurt Barwis and St. Francis Hospital President and CEO Christopher Dadlez

Bristol Hospital President and CEO Kurt Barwis told Malloy that his hospital has seen an increase in the number of patients who can’t pay their bills. His and other hospitals have already been cutting costs and becoming more efficient. The hospital loses money treating Medicaid patients, and under Malloy’s budget, stands to lose another $1.4 million in state reimbursement, he said.

“It’s difficult to imagine how I’m going to navigate 2012 and 2013 with what appears to be a $4 million gap in my reimbursements from the state,” he said. “So I was just curious if you could help me understand, and we certainly are willing to help you as well.”

The governor said he didn’t have an easy answer.

“Again, I’ll just repeat. I’ll trade my projected deficit over two years, something approaching $7 billion, to your $4 million any day,” Malloy said.

Yale-New Haven Hospital President and CEO Marna Borgstrom said she suspected her fellow CEOs, who have endured years of cost-cutting and tight margins, could feel Malloy’s pain.

But she warned that reducing state funding could interfere with hospitals’ ability to develop a better health care system by investing in things like information technology and changes aimed at reducing unnecessary use of acute care services.

“Part of the concern that we all have is that this is one more thing that’s going to reduce that ability to think beyond the next year and to actually think about how we together and with the state think about what we need to do to make access to health care better,” she said.

Borgstrom asked Malloy how hospitals could function on reduced funding. The governor suggested partnering with community health centers, which receive federal funding for treating patients with no insurance or who are covered by Medicaid–patients who typically represent financial losses for hospitals.

“I think there are hospitals represented in this room that need to rethink their relationships with community health centers,” he said.

Malloy then returned to his theme: Hospitals have been innovating for years. State government hasn’t. “That’s the ‘hospital’ I picked up,” he said. “It’s the one that hasn’t innovated, still has the staffing and the HR and the old rules and the old management style and the old revenue style, that’s what I have.”

He urged hospital officials to support the budget, warning that any alternative proposals would be worse for them.

“I know I disappoint everywhere I go,” he said in his closing remarks.