This note came out recently from the Minneosta Hospital Association. Posted here with their permission:
Dear Minnesota Hospital Leaders, Communicators and Government Relations Officers:
The recent cuts to hospitals through the unallotment process demonstrate that the hospital community needs to unite behind a sustained advocacy effort to reverse a troubling trend. The trend is the state’s repeated reliance on cuts to hospital payments as one of the preferred tools for solving its budget problems. As the public’s silent reaction to these unallotment decisions illustrates, the continued lack of appreciation for how hospital spending impacts individuals’ lives will continue to serve as a political anesthetic for lawmakers wielding a budget-cutting scalpel on Minnesota’s health care system unless hospital leaders take action.
Last Friday, Governor Pawlenty exercised his unallotment power to cut $38 million of funding for hospitals to balance the state’s budget. Specifically, he took money designated for Medical Education and Research Costs (MERC) and Disproportionate Share Hospital (DSH) payments.
The Governor’s unallotment choices follow a disturbing pattern as the state has repeatedly leveled disproportionate cuts against hospitals to remedy its budgetary shortcomings. Although hospital expenditures amount to only 15% of the Department of Human Services’ budget, hospitals suffered more than 50% of the Governor’s unallotment cuts from that budget.
These cuts come on top of the significant reductions of Medicaid payments to hospitals from the 2008 legislative session. To resolve the state’s shortfall, the government needed to reduce expenditures by $268 million. It accomplished this, in large part, by imposing reductions and delaying rebasing to hospital payments that will inflict a $196 million impact to hospitals when federal matching funds are accounted for. Together, the unallotments and the 2008 Medicaid cuts serve as painful reminders that hospitals have become a target during economic downturns when the state needs to fill budget holes.
The Governor’s selection of MERC and DSH payments stems from “an effort to avoid direct impacts to individuals,” according to his website. In other words, there is an impression that these resources, and by implication the hospitals that receive them, do not affect people’s lives directly.
This impression was echoed in the StarTribune’s coverage of the unallotment. It mentioned the cuts to hospitals, but then dismissively stated that “direct care should remain unaffected. Most of the cuts come in medical training expenses and payments to hospitals.” As a result, readers were left to believe that the state can cut payments to hospitals and reduce funding for medical education without affecting patient care. For the vast majority of the general public, these programs and their role in providing access to health care by well trained providers are unknown. Consequently, when these cuts are announced and covered in this manner, there is little backlash.
The public’s lack of understanding does not diminish the fact that cuts come at a great cost to our hospitals, and the patients and communities they serve. Therefore, it is incumbent upon each of us to help policymakers, the media and the public understand how state payments to hospitals – from Medicaid reimbursement rates to DSH and MERC payments – as well as taxes on hospitals – from the MinnesotaCare provider tax, to the Medicaid surcharge, to the hidden tax of underpayments by public programs – impact our health care, our communities and, most importantly, our families and neighbors.
We hope that you will use specific examples of how cuts by the state impact your organization and the lives of the people you serve, whether those impacts are the loss of important community benefit programs, elimination of service lines, delays in opening new facilities designed to improve patient care, or layoffs of qualified and dedicated staff. Please share those examples with the Minnesota Hospital Association, too, because we will be vigorously carrying these messages to legislators and their staff, to the Governor’s administration, and to the media over the next several weeks. Our legislators need to understand that hospitals cannot sustain further cuts.
If you want your legislators’ contact information or have any questions or concerns, please feel free to contact Mary Krinkie at (651) 659-1465, Sue Stout at (651) 603-3526, or any of the staff at MHA.
Sincerely,
Matt Anderson, J.D.
Vice President, Regulatory/Strategic Affairs
Minnesota Hospital Association
2550 University Avenue West, Suite 350-S
St. Paul, MN 55114-1900
