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Region's hospitals fight Malloy budget items

Lawrence & Memorial Hospital in New London and The William W. Backus Hospital in Norwich have joined a statewide campaign to convince lawmakers that two provisions of Gov. Dannel P. Malloy's proposed budget would hurt Connecticut's 29 nonprofit hospitals and, by extension, the people they employ and the patients they serve.

Malloy's proposed budget, currently under review by the legislature, eliminates $83 million in reimbursements to hospitals to help cover uncompensated care - treatment provided to patients unable to pay due to lack of insurance and financial hardship. It would also impose a 5.5 percent tax on certain revenues that flow to hospitals. The revenues that would be taxed total about $335 million for all 29 hospitals combined, Kim Hostetler, vice president of administration and communications for the Connecticut Hospital Association, said this week.

Malloy's office contends that imposing the tax would fulfill a federal requirement that would enable the state to access $150 million to $180 million in federal funds not otherwise available, and that a significant portion of the tax revenues would be returned to the hospitals in increased Medicaid rates. Hospitals, however, are concerned that wouldn't be the case, Hostetler said.

"It would be a dangerous direction for the state to go in," she said of the proposed "hospital tax," explaining that hospitals are concerned that once in place, there is no guarantee that the state wouldn't ultimately keep all or most of the funds and return little to the hospitals.

Malloy's office also says that hospitals have been helped recently by the transfer of patients from the state-run SAGA insurance program onto Medicaid last year, because Medicaid's reimbursement rates for hospitals are higher.

"In the aggregate, most hospitals will be getting more and a few will be getting less," Anne Foley, undersecretary for policy development and planning for the Office of Policy and Management said Tuesday, adding that the total gain for all hospitals would be $36 million annually. She stressed that the budget provisions regarding hospitals are still "in flux" and that calculations of how individual hospitals would be affected are still being revised. The proposals are being considered by the legislature's Appropriations Committee as part of its deliberations on the state budget.

Current OPM numbers show Backus would net $4.5 million more in state funds than this year, and L&M would net $2 million, Foley said. The hospital association's numbers, however, are far different, showing Backus losing $2 million and L&M losing $1.7 million - the amount they currently receive from the state for uncompensated care.

Last week the state hospital association launched a website,, for its campaign opposing the tax and the uncompensated care fund cut.

L&M provides about $20 million in uncompensated care annually from a combination of bad debts and charity care, spokesman Mike O'Farrell said. Backus provides about $3 million in charity care, spokesman Shawn Mawhiney said, and millions more in other uncompensated care. No more precise figure for Backus was available Tuesday.

A section of Backus' website,, is also devoted to the opposing the "hospital tax" and the uncompensated care reimbursement. The site includes a written copy of testimony by hospital President and Chief Executive Officer David Whitehead to the legislature. Both L&M and Backus are appealing to staff, physicians and the community to write letters to lawmakers. Both also lobbied the local delegation.

"I have lobbied legislators directly, not only about the financial hardship this would be for L&M and the other hospitals, but also that it's a jobs killer that would threaten our ability to finance construction projects and health-care jobs," said Bill Stanley, vice president for Development and Community Relations at L&M.

State Rep. Betsy Ritter, D-Waterford, co-chairwoman of the Public Health Committee, said she has received numerous letters from constituents opposing the changes, many of which appear to be form letters provided by the hospitals. Given the state's budget deficits, she said, the chance to access additional federal dollars must be considered.

"It's an idea that cannot be left off the table," she said. "The goal is to find a way to realize the federal dollars without harm to the hospitals."


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