Dartmouth-Hitchcock Medical Center and other New Hampshire hospitals are bracing for sweeping budget and service cuts in accordance with the new state budget, which went into effect July 1 and included higher tax rates on Medicaid reimbursement.
These cuts will likely arise even in light of a federal lawsuit that DHMC and nine other hospitals filed against the state on July 25. The suit claims that New Hampshire, which has the nation's lowest Medicaid reimbursement rate, is not providing adequate funding under federal law, according to a DHMC press release.
The state budget included a 5.5 percent tax on net patient service revenues, which DHMC estimates will cost it $40 million this year alone, according to DHMC spokesman Rick Adams.
"We would actually be paying more into the state than we would be getting back in reimbursements," he said. "We want to be reimbursed fairly for the service we provide."
Adams said that a "significant amount" of DHMC's operations are tied to Medicaid funding, as DHMC is the "de facto safety net hospital for the state." DHMC operates New Hampshire's only level-1 trauma center, its only helicopter rescue unit and its only neonatal intensive care program.
DHMC spent $88 million in treating Medicaid patients in 2010, but only received $28 million from the state, according to the press release. This deficit, combined with the new tax on patient services, means that the hospital must account for nearly $100 million in cuts from its budget for the next fiscal year. As a preliminary effort to reduce costs, the hospital announced a voluntary early-retirement package to more than 700 employees on Aug. 10. The hospital had previously laid off 300 employees and reduced discretionary spending, according to The Boston Globe.
Other state hospitals, including Elliot Hospital in Manchester, Wentworth-Douglas Hospital in Dover and St. Joseph Hospital in Nashua, had been forced to make similar cuts, though they had primarily relied on layoffs, Adams said. St. Joseph also shut down a subsidiary ambulance company, leading to even more layoffs.
DHMC administrators have not decided where they will make further cuts, but is looking at all programs, Adams said. The hospital's fiscal year begins on October 1, and the final budget will be announced some time in September.
"When you talk about $100 million, it doesn't matter how big the organization is," Adams said. "You have to really think about the operation and how we move forward."
The lawsuit mentioned the helicopter rescue service and the neonatal care unit as possible cuts, emphazising the potential adverse impact of the reduced budget, according to Adams. Cuts to the helicopter unit would be especially damaging to New Hampshire health services as many hospitals, particularly those in the state's rural north, depend on the service for patients in critical condition.
"Any actions that we take will have impacts statewide, not just here in Lebanon," Adams said.
Stephen Norton, executive director of the New Hampshire Center for Public Policy, said that the impact of budget cuts would depend on how hospitals respond to the state cuts. Recent research has found that approximately 20 percent of services provided at New Hampshire hospitals was unnecessary, and the hospitals could theoretically find ways to absorb the cuts without having too large of an impact on medical care, he said.
Norton said that due to the timing of the cuts, however, Norton said that major service cuts were inevitable, as the current budget environment would likely force hospitals to make immediate short-term service cuts.
"[Hospitals] will try to minimize the effects of these cuts, but it will have an impact on the provision of care," he said. "It's hard to say how they will respond."
Adams said that although DHMC administrators will be looking to make cuts in all programs, they will try to do so in the least damaging ways possible.
"Everything else remains on the board," he said. "The one thing that we will not compromise is patient care."
