LETTER: A Cut to the Bone: The Damaging Impacts of Proposed Medicaid Losses to New York’s Hospitals & Health Systems

To the Editor:

Unless the State Legislature acts, Governor Cuomo’s proposed state budget, coupled with the loss of federal matching funds, will mean New York’s hospitals and nursing homes will lose over $1 billion in Medicaid funding. This is the worst the health care industry has seen in nearly 10 years.

These proposed cuts negate the positive transformation that New York’s hospitals and health systems have undergone in recent years, despite facing major financial challenges. Efforts include advances in population health, coordinated care, and preparing for the national move towards a value-based delivery model. It is important to note that New York State is the only state in the nation requiring our hospitals to operate as not-for-profits.

As non-profits, hospitals throughout Upstate New York have an average operating margin of around 0.3 percent , and statewide the average is 1.35
percent. Hospitals throughout New York State are also required – by law – to treat whomever comes through their doors, regardless of ability to pay. While New York State has made great strides to insure most New Yorkers, there is still a small population (less than 5 percent) who remain uninsured. Hospitals continue to treat those patients, because they must – and because it’s the right thing to do.

The largest government insurer in New York state is Medicaid. Medicaid rates in New York State have not been increased in over 10 years, and statewide Medicaid only reimburses providers 73 cents for every dollar of care provided. In Upstate New York, Medicaid only cover 65 percent of the cost of services. Astronomical cuts to Medicaid, an already inadequate payment system to the not for profit hospital industry, seem to contradict the state’s mandate that hospitals operate with not-for-profit missions.

Hospitals are the safety-net of their communities, providing essential healthcare services but also driving local economies, especially throughout our Upstate regions. Hospitals are often the only emergency services provider and main provider of primary care, as well as hold the rank of the largest single employer in almost every upstate New York community. If these cuts take effect, services, jobs and quality will inevitably deteriorate, likely to the point of no return. The collapse of a rural hospital will, unfortunately, begin the collapse of an entire community.

These proposed cuts are not only not unsustainable, but are misaligned with state’s commitment to support to our healthcare industry, especially hospitals and nursing homes serving our most vulnerable populations. Iroquois Healthcare Alliance, representing 54 hospitals and health systems throughout Upstate New York, strongly urges our state legislators to oppose these reductions.

Sincerely, Gary J. Fitzgerald, president, Iroquois Healthcare Alliance

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