Region's hospitals would lose millions more under Malloy's new budget plan

Gov. Dannel P. Malloy’s revised budget proposal for the next two years would cost local hospitals millions more than they were expecting.

The new biennial budget plan, released Monday, proposes a total $215 million reimbursement to the state’s 27 hospitals, a combination of federal Medicaid reimbursements and state payments to offset a new local property tax that would be imposed. Under Malloy’s plan, cities and towns would be allowed to tax nonprofit hospitals’ real property, bringing in about $212 million to municipalities.

The $215 million reimbursement to hospitals in the new plan is $35 million less than the budget plan Malloy released in February. Hospitals already were critical of that plan and the local property tax provision.

The governor’s revised budget plan was created to compensate for a $1.5 billion projected decline in state income tax receipts over the next two years. Alternative plans are being considered along with Malloy’s plan in the state legislature.

The William W. Backus Hospital in Norwich stands to lose about $1 million more in the governor’s new plan.

“It would be about a $16 million loss for Backus,” said Shawn Mawhiney, spokesman for Hartford HealthCare, the hospital's parent network. That compares to a $15 million loss it had calculated under the earlier version of the budget plan.

The entire network would lose $126 million compared to the current level of state reimbursement, he said.

At Lawrence + Memorial Hospital in New London, preliminary estimates predict a $2.5 million loss, said Vincent Petrini, spokesman for Yale New Haven Health, the parent network of L+M. In the original budget plan, L+M would have gained $1.2 million in state revenues, he said.

Both spokesman emphasized that the losses come on top of several years of cuts and new state taxes on hospitals.

Currently, the state’s hospitals pay a combined state tax of $556 million. That would rise to $623 million in fiscal year 2017, and $625 million in fiscal year 2018-19 under the governor’s plan, according to the Connecticut Hospital Association.

“Cutting and taxing hospitals has to stop,” said Jennifer Jackson, chief executive officer of the hospital association. “We’re alarmed that Gov. Malloy is doubling down on his plan to solve Connecticut’s budget problems on the backs of the sick. It was a bad idea when he first proposed it, it’s a bad idea now, and it isn’t a way to fix Connecticut.”

She called on state lawmakers to reject Malloy’s proposal.

Chris McClure, spokesman for the state Office of Policy and Management, said the hospital association is mischaracterizing hospitals’ financial health.

“Let’s be clear,” he said. “Connecticut hospitals generated $870 million dollars of revenue over expenses purely from hospital operations in 2016. At a time when both parties are recognizing the need for changes in municipal aid, it is absolutely absurd for (the hospital association) to claim that what is being asked of hospitals — and what is being given to them — in our budget proposals puts patient care at risk.”

j.benson@theday.com

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