**Sent from Lawrence Massa to hospital leaders in Minnesota**
Dear Hospital Leaders:
Without a doubt, the historic projected budget shortfall of $ 5.2 billion that was announced yesterday will bring hardship for all Minnesotans. Most Minnesotans benefit from government services. Likewise, most of us pay taxes. The magnitude of this shortfall may mean that taxes will need to be raised and that services will need to be cut and we are pleased to see that legislative leaders are acknowledging that everything needs to be on the table.
That said, Minnesota’s providers believe that the Health and Human Services budget should not be singled out to take a disproportionate share of the cuts. This is precisely the wrong thing to do. It would cause hardship to our neediest citizens and would overlook the fact that the state’s Medicaid budget is one of our best economic development tools. For every dollar the state spends in the Medicaid program, the federal government puts in a matching dollar.
Hospitals and nursing homes are certainly the largest employers in many communities throughout Minnesota. Hospitals in particular purchase large quantities of goods and services, creating significant economic impact in our communities. Cuts to hospitals could bring job losses beyond just the walls of our hospital buildings. Preserving our community infrastructure should be one of the highest legislative priorities in 2009.
The hospital community did its part to address the state’s budget shortfall last year. Hospitals were one of the few entities that received budget cuts in 2008, totaling nearly $200 million, including federal matching dollars. Because cuts in the Medical Assistance program are cumulative, the cuts that occurred in 2008 are on top of previous cuts made in 2002, 2003 and 2005, meaning that hospitals are currently paid at 2002 costs minus 14.96 percent.
The growth in the Health and Human Services budget is not because health care providers are being paid more money for particular services. It is primarily because our population is older and sicker. And now, in the midst of a recession, more people qualify for our public health programs. With increased enrollment in these programs costs will certainly go up. It is important to note that most hospitals in Minnesota loose money when caring for individuals in our public health programs. In particular, Medicaid pays some Minnesota hospitals about 30 percent below the cost of providing care.
Further cuts would be devastating to hospitals and the people that they serve. Cutting services or trying to cost shift to other payers would be extremely difficult to do. As you know, hospitals are feeling the affects of the recession, yet they are trying to take steps to ensure that they are financially stable in these unstable times. MHA is currently colleting information to gage the economy’s impact on Minnesota’s hospitals and we hope to soon have a clearer picture of how our hospitals are coping with the recession.
Now, more than ever, the hospital community will need to engage in positive dialogue with our public officials and we will need to do our part to help Minnesota get through this financial crisis. We will ask policy makers to recognize that some cuts are more difficult to heal than others.
MHA’s board, the policy and advocacy committee and the finance committee will be discussing strategies for how the hospital community can best advocate for itself and its patients in light of this news. In the meantime, please let me know if you have any specific questions or concerns.
Sincerely,
Lawrence J. Massa, FACHE
President
