Pa. senators question cut to hospital funding

HARRISBURG - Even as the state struggles with a growing budget deficit, senators yesterday questioned why the Rendell administration is proposing to cut at least $20 million to hospitals that disproportionately serve Medicaid patients as well as the uninsured poor.

At a budget hearing of the Senate Appropriations Committee, both Democratic and Republican senators expressed concerns about Gov. Rendell's proposal to slash payments to those hospitals by roughly 15 percent in his proposed $29 billion budget for 2009-10.

Public Welfare Secretary Estelle Richman, whose department oversees those Medicaid payments, said she was "very sensitive to the fact that our hospitals are feeling the impact" of the state's budget problems.

But, she said, "we are constantly told [the department's] budget is too high and too big. . . . We have to make cuts."

Affected by the proposed cut would be 120 hospitals, in small towns and big cities across the state. More than two dozen are in Philadelphia and its suburbs, including Temple University Hospital, Thomas Jefferson University Hospital, Children's Hospital of Philadelphia, Mercy Suburban Hospital/Norristown, Delaware County Memorial Hospital, Brandywine Hospital, and Doylestown Hospital.

Hospital advocates argue that the more than $20 million in state funds is essential for providing care for the poor and disabled, since hospitals never fully recoup the cost of treating Medicaid patients.

And hospitals cannot turn away those patients. That, in turn, will force them to recoup the money elsewhere - or cut their budgets.

"And therein lies the real dilemma," said James Redmond, senior vice president for legislative services for the Hospital and Healthsystem Association of Pennsylvania.

"Our fear is that it puts hospitals in a situation where they will have to lay off workers," Redmond added.

Advocates also say that Rendell's proposed cut far exceeds $20 million. That figure, they say, does not include funding for hospital-based burn centers and critical access hospitals. Nor does it take into account federal matching dollars for those programs.

The Hospital and Healthsystem Association is pushing for the Public Welfare Department to tap into billions in federal stimulus dollars coming to Pennsylvania to help the state avoid deep cuts in social services.

Richman yesterday told senators that the first installment of $680 million arrived last week.

"President Obama specifically told the nation's governors that the stimulus plan will ensure that [states] don't need to make cuts to essential services that Americans rely on now more than ever," Carolyn F. Scanlan, the Hospital and Healthsystem Association's president and chief executive officer, said in a statement.

Public Welfare spokeswoman Stacey Witalec said that the department understood the hospitals' position, but that "given all the other difficult choices the administration has had to make, we have to make sure we are first taking steps to preserve the social safety net for Pennsylvania's most vulnerable families."