Hospitals Brace For Effect Of Budget Stalemate

By Susan Haigh Associated Press

HARTFORD – Already suffering from financial troubles, many Connecticut hospitals are bracing for a continued stalemate over the state budget.

Gov. John G. Rowland, who signed a second executive order this week to keep the state running, is holding back millions of dollars owed to 31 acute care hospitals across Connecticut. Those payments, set to go out this month, help cover the costs for uninsured patients.

About $20 million in reimbursements for Medicaid clients and related programs is also stalled because of the state’s budget impasse.

Hospital officials are also worried about a 5.75 percent sales tax on patient care services taking effect. The tax was suspended for two years but could kick in this summer unless it is repealed in a new, two-year budget agreement.

“It’s nerve-racking,” Larry Tanner, chief executive officer of New Britain General Hospital, said of the situation Tuesday. His hospital receives about $500,000 in state payments each week. “It’s a major significant cash flow issue to any of us whenever there is a delay.

“With all the uncertainty kind of going on and on, it’s harder and harder for every one of the hospitals out there to do business as usual,” Tanner said. “We’re doing everything we can to encourage a speedy resolution to this budgeting process.”

It’s unclear when lawmakers and the governor will reach a deal on a new budget. Democratic and Republican leaders met at the Capitol for a couple hours Tuesday but made minimal progress.

More than a week into the new fiscal year, they are working in extra innings trying to craft a tax and spending package that covers an approximate $1 billion deficit in the current fiscal year.

Meanwhile, the governor is using an executive order to keep the government operating.

Marc Ryan, Rowland’s budget director, said the state pays out about $3.5 million twice a month to help hospitals cover indigent and uninsured patients. Those payments typically range from $600,000 for Yale-New Haven Hospital to $13,000 for Rockville General Hospital.

About $20 million in payments for Medicaid and similar programs is currently on hold, Ryan said. Yale-New Haven was expecting to receive $3 million from the state this month while Sharon Hospital was supposed to receive $10,000.

Without a budget, it’s uncertain when or maybe if those checks will be cut, Ryan said.

In January 2002, a study conducted by the state’s Office of Health Care Access determined the fiscal health of many hospitals is suffering, including seven whose condition worsened from the prior year. The study, based on data from the fiscal year which ended on Sept. 30, 2000, showed none of the 31 acute care hospitals were in imminent danger of closing.

Six hospitals did not have enough cash on hand to cover one week’s expenses, the study found. No hospitals defaulted on debt payments, but some had violated their borrowing conditions by not having enough cash on hand, according to the report.

Roberts said hospitals are hemorrhaging money is large part because of low reimbursement rates from Medicare and Medicaid.