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Area hospitals face major cuts in sequestration

Rochester Business Journal
March 1, 2013

Sequestration looms large for area hospitals that will face more than $62 million in Medicare reimbursement cuts if Congress fails to pass a deal before today's deadline.
 
Sequestration, which features federal spending cuts totaling $85 billion in the current fiscal year, includes a 2 percent cut to Medicare along with larger cuts to federal health care agencies.
 
The Healthcare Association of New York State said the sequestration would result in more than $2.1 billion in Medicare reimbursement cuts for hospitals in the state. The cuts would go into effect April 1.
 
Among Monroe County hospitals, the University of Rochester's Strong Memorial Hospital would see the biggest cut, more than $27 million from 2013 to 2021, HANYS said. Rochester General Hospital would lose $16.8 million; Unity Hospital, $9.3 million; UR's Highland Hospital, $8 million; Lakeside Memorial Hospital in Brockport, close to $1 million; and Monroe Community Hospital, nearly $400,000.
 
In addition, Geneva General Hospital faces $3.5 million in cuts; F.F. Thompson in Canandaigua, $2.6 million; Newark-Wayne Community Hospital, part of Rochester General Health System, $2.5 million; Clifton Springs Hospital and Clinic, Ontario County, $2.4 million; United Memorial Medical Center in Batavia, Genesee County, $2.3 million; and Nicholas H. Noyes Hospital in Dansville, Livingston County, faces $1.8 million.
 
"We've just been seeing these continued cuts on top of cuts that have already been enacted," said HANYS spokeswoman Melissa Mansfield. "This will really hinder hospitals' ability to provide the services at the quality levels their patients need."
 
The sequestration cuts also will impact the University of Rochester Medical Center, including cuts to funding that comes from institutions such as the National Institutes of Health and the National Science Foundation, as well as some energy programs.
 
Peter Robinson, chief operating officer at URMC, said that with the funding from those organizations being cut, the medical center anticipates it will lose some $23 million within the first six months after the sequestration goes into effect.
 
"The impact is going to be very real across our mission areas," he said. "On the health care side, what it's likely to do is slow down capital investments and some program extensions we have planned.
 
"On the research side, it's much more direct. The NIH has been flat-lining funding for several years. We're losing more and more money on research every year. If the sequestration cuts go through, we are likely to see a slowdown in the number of research projects and the production of new technology."
 
Robinson said he could not comment on what specific programs or investment opportunities would be affected. It is not out of the realm of possibility to think the cuts could reduce employment down the line, he said.
 
For hospitals, the sequestration cuts may feel like a case of piling on. More than $2 billion in sequestration cuts would come in addition to more than $20 billion in unrelated cuts New York hospitals are to face over the next decade, HANYS said.
 
State hospitals will face $15.9 billion in cuts from the Patient Protection and Affordable Care Act, more than $4 billion in cuts from Medicare inpatient coding reductions as part of the American Taxpayer Relief Act and $23.5 million in support to providers for unpaid patient debt, HANYS said.
 
A joint study done last year by the American Hospital Association and the American Medical Association said the sequestration would lead to the loss of more than 200,000 jobs in health care in 2013, a number that would go up in coming years as more sequestration cuts go into effect.
 
Mansfield said that since the start of 2010, more than 6,000 jobs have been lost from hospitals and health systems in New York.
 
"Going forward, hospitals will have tough decisions to make in deciding how to cope with these cuts," she said. "Those decisions will vary on a hospital-to-hospital basis, based on what they feel their communities need."
 
Whether many hospitals can sustain further budget cuts is uncertain. Mansfield said HANYS data shows more than half of the hospitals in the state operate with a financial margin of 1 percent or less, with some already losing money.
 
Financial woes are leading Brockport's Lakeside Hospital to convert to an outpatient and urgent care facility, a process it hopes to complete by April.
 
"We have already seen a decline in the number of jobs and the hours of operation at a number of hospitals, which has led to longer wait times at many hospitals," Mansfield said.
 
Mansfield said she could not comment on any hope HANYS had that Congress could find a resolution before Friday. As of Wednesday afternoon, it did not look good.
 
Political leaders have known about the sequestration deadline for 18 months. Still, on Wednesday, the Chicago Tribune reported President Barack Obama planned to meet with congressional leaders Friday to discuss the automatic spending cuts.
 
Robinson said the uncertainty of what will happen is one of the hardest things to deal with.
 
"We don't know what the plan is," he said. "We don't know if the cuts will go into effect and then in a couple of months they'll come up with a new deal. If that happens, we don't know if they'll restore the money that's been lost or not.
 
"It's the lack of visibility of what's going to happen next coupled with the dollar amounts that makes this so unprecedented. It's the same problem companies have been dealing with all along during the recession."

3/1/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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