The combined impact of New Hampshire state budget cuts enacted on July 1 and prior reductions in hospitals' Medicaid reimbursement rates over the past three years has forced Dartmouth-Hitchcock Medical Center to reduce its workforce and consider altering certain services in order to cover approximately $100 million in losses, according to Rick Adams, direction of media relations for DHMC.
"We're looking at all aspects of the operation to see what we can change," Adams said.
To address the budget gap, DHMC plans to decrease its discretionary spending by reducing its workforce, as well as possibly altering the services that the hospital offers patients, Adams said. To reduce its number of employees, DHMC offered a voluntary early retirement plan in the form of a lifetime annuity or a single lump-sum payment to 734 employees on Aug. 10, Adams said.
Depending on how many employees accept the offer, the plan will save DHMC between $5 million and $25 million, Adams said. Employees who were offered the plan have until Sept. 30 to make their decision.
The early retirement plan was offered to employees at all levels of the organization whose age plus years of service added up to at least 80, except for those who treat patients directly, Adams said.
"If we offered the plan to [doctors and nurses], it would impact the quality of patient care," Adams said. "That's something we don't want to compromise."
DHMC also plans to leave many positions vacated by employees who recently retired or switched jobs to further save money, according to Adams.
The state's budget reduction eliminated payments from Disproportionate Share Hospital, a program that compensates hospitals that provide free care to uninsured patients who cannot afford medical services, according to Adams.
The cuts will cost DHMC approximately $40 million annually, which is in addition to the $60 million discrepancy between the amount DHMC spends on Medicaid patients and the amount the state reimburses the hospital each year for treating Medicaid patients, Adams said.
DHMC officials must finalize what cuts they will implement before the hospital's new budget goes into effect on Oct. 1, Adams said. In an effort to avoid future cuts, DHMC along with nine other New Hampshire hospitals filed a federal lawsuit against the state of New Hampshire on July 25 alleging that the state's current Medicaid reimbursement rates are insufficient. Through the complaint, the 10 hospitals hope to reverse the changes to the state's 2012-2013 fiscal year budget, a DHMC press release stated.
The state's actions threaten hospitals, physicians and Medicaid-eligible patients, according to the complaint. "The threat is compounded by a series of actions taken over the last three years that have drastically reduced Medicaid reimbursement rates paid to hospitals for their provision of services to Medicaid beneficiaries," the complaint said.
The complaint alleges that reductions to Medicaid reimbursement rates in past years have violated provisions of the Medicaid Act, Executive Vice President of the New Hampshire Hospitals Association Kathy Bizarro said in an interview with The Dartmouth. According to the law, states are not allowed to reduce Medicaid reimbursement rates for budgetary reasons but instead must examine factors such as efficiency, economy, quality of care and equal access to services, Bizarro said.
"There were several instances in the past where the legislature did not reduce reimbursement rates by looking at these factors and instead only did it based on budgetary reasons," Bizarro said.
New Hampshire now has the lowest Medicaid reimbursement rate in the country, she said.
State Sen. Bob Odell, R-Lempser who voted for the current budget said he understands the hospitals' lawsuit against the state.
"The state of New Hampshire does the best it can with the resources that come in," Odell said in an interview with The Dartmouth. "If people think that the Medicaid reimbursement rates are too low, we understand that."
In fiscal year 2010, DHMC provided $88 million in health care services to Medicaid patients but was only reimbursed $28 million, Adams said. DHMC was charged a 5.5 percent Medicaid enhancement tax which amounted to $40 million on net patient service revenues, which used to be redistributed to hospitals through the now-eliminated Disproportionate Share Hospital program, Adams said.
The removal of the Disproportionate Share Hospital funds will cost hospitals across New Hampshire $250 million over the next two years, and has already resulted in layoffs and elimination of services in larger hospitals, Bizarro said.
Odell, chairman of the New Hampshire Senate Ways and Means Committee, said that after distributing funding to mental health agencies and community based organizations, there was not sufficient funding left to restore the Disproportionate Share Hospital program.
There is a provision in the recent budget, however, stipulating that the state will use extra revenue to reimburse hospitals for uncompensated care, Odell said.
"We know that hospitals such as [DHMC] take the biggest hit, and we want to rectify that if the revenues come in," Odell said.
