Two South Side hospitals fear they may have to shut or slash services as a result of changes to how the state allocates Medicaid funding.
Roseland Community Hospital and South Shore Hospital say they face a potentially fatal funding squeeze in the long-awaited redesign of a program state lawmakers are expected to vote on soon. Meanwhile, many other safety-net hospitals in poor communities that serve large numbers of Medicaid patients are breathing sighs of relief that their funding won’t take the hits they feared.
“It’s a travesty,” said Tim Egan, CEO of Roseland, which along with other hospitals across the state received updated estimates late last week of how much they would lose or gain under the redesigned program.
Egan said the new numbers show the 160-bed Far South Side hospital receiving $6.5 million less in annual funding from the program even though the total pot of Medicaid money for hospitals will increase. The Illinois Health and Hospital Association, the trade association that is leading the redesign, “has written Roseland’s obituary,” he said.
“Instead of investing in the future of Roseland with additional funding, the IHA plan cripples Roseland Hospital and will jeopardize current operations,” Egan said.
At South Shore Hospital, a 136-bed hospital with 500 employees, CEO Tim Caveney said he needs a $3 million increase in funding in order to keep the doors open. But the updated estimates show South Shore’s funding will be flat.
“The likelihood of us closing this summer is very high unless I can come up with some money somewhere else,” said Caveney, whose hospital population consists of two-thirds Medicaid patients. He said he laid off 50 people last year and cut all salaries by 10 percent, except for those people on minimum wage, and has lost good employees as a result.
The state House Appropriations-Human Services Committee held a hearing Tuesday morning to discuss legislation that details the redesign of the funding program, and the Senate Human Services Committee had a hearing scheduled for Tuesday afternoon. Rep. Greg Harris, D-Chicago, chairman of the House committee, said a vote wouldn’t take place Tuesday, but lawmakers are under the gun to act quickly. The plan must be signed by the governor and approved by the federal government before the current program expires June 30.
Hospital executives have been wringing their hands for months about the revamp of the hospital assessment program, a $3.5 billion pot of money that provides more than half the state’s total hospital Medicaid funding. The program taxes hospitals and then grows that money through a federal match, and the total is redistributed to about 200 hospitals across the state.
The redesign threatened to reduce funding to some safety-net hospitals — many of which are in Chicago’s low-income communities — with large Medicaid patient populations, as well as rural critical-access hospitals, because it’s been so long since the formula was updated.
The current formula bases the amount hospitals pay and receive on 2005 inpatient data and 2009 outpatient data, which officials say doesn’t reflect how and where Medicaid recipients are currently getting their care. A decline in hospital stays, growth in outpatient services, population shifts and an expansion of Medicaid to include some 680,000 more Illinois adults has spread the Medicaid market to more hospitals than a decade ago.
The state recently agreed to ask the federal government for $360 million more to add to the assessment pot, raising hopes that it would cover the needs of the safety-net hospitals, many of whose budgets depend heavily on the Medicaid money. Indeed, safety-net and rural critical-access hospitals, which together comprise more than 70 hospitals across the state, collectively would receive more than half of the new federal funding included in the plan, said Danny Chun, spokesman for the Illinois Health and Hospital Association.
“We have been working very hard for many, many months to try to assure the best outcomes for hospitals across the state,” Chun said, emphasizing that preserving access to health care among vulnerable communities has been a priority of the redesign.
Several hospital executives who had worried they might have to close their doors were heartened by the updated estimates of their funding as the legislation is finalized. Charles Holland, CEO of St. Bernard Hospital in Englewood, which initially faced a $1.7 million cut, said his new numbers are a “significant improvement.”
Similarly, Jose Sanchez, CEO of Norwegian American Hospital in Humboldt Park, said he was pleased with the latest model, after initially blasting the state for what he viewed as a disregard for community hospitals like his.
Still, Sanchez said he was concerned about the safety nets that won’t get the money they need, and “I expect that there will be a political solution to ensure these institutions continue to provide the vital services and quality health care to their impoverished communities.”
At Loretto Hospital in the Austin neighborhood, CEO George Miller said he appreciated that he would be getting a $2 million increase in funding, rather than the $9 million funding cut that originally had been estimated months ago. Still, Miller takes issue with a major change in the distribution methodology, which will increasingly allocate funding in a way that reflects actual patient and procedure volume, rather than a fixed sum.
The state hospital association said that’s a necessary change to get federal approval of the plan. But safety-net hospitals have expressed concern about what that will mean for cash flow, especially given high rates of claims denials.
In addition, Miller said his funding boost will depend on whether he can increase the volume of inpatient procedures at his hospital, but his community may be better served with other types of care.
“If we don’t put patients in the hospital, we won’t get more money then,” he said. “That doesn’t make sense.”
Rep. Will Davis, D-Homewood, expressed concern at Tuesday morning’s hearing that some large hospital systems are poised to get a funding bump while two safety-net hospitals are contemplating closure.
“Are we setting ourselves up so that the safety nets say, ‘I can’t afford to fight the fight anymore?’” Davis said.
Rep. Camille Lily, D-Oak Park, said she worried the changes could increase disparities in poor communities that already lack access to transportation, housing, grocery stores and schools.
The Association of Safety-Net Community Hospitals said it appreciates that its many of its member hospitals’ needs were taken into account in the new funding formula.
“We are hopeful the safety nets who still have funding concerns can have those addressed as the legislative process moves forward this week,” said Ryan Keith, spokesman for the association.
Anel Ruiz, spokeswoman for the Chicago Department of Public Health, said in a statement that the city supports adequate funding of hospitals. “Chicago’s community hospital are an integral part of our city’s world-class health care system,” she said.