MHA Report: Bay State Hospitals Key to Massachusetts' Recovery, but Viability is Threatened by Economic Downturn & State Cuts

MHA REPORT: BAY STATE HOSPITALS KEY TO MASSACHUSETTS RECOVERY, BUT VIABILITY IS THREATENED BY ECONOMIC DOWNTURN & STATE CUTS

Calls for Expanded Use of Federal Stimulus Funds to Restore and Avoid "Unintended Consequences"

Massachusetts hospitals are uniquely situated to deliver essential care and community benefit, as well as serve as employers of choice and engines of economic growth for both the local and statewide economies. But the global fiscal crisis and state Medicaid (MassHealth) budget cuts have sparked such a deep and systemic decline in hospital finances that substantial federal stimulus funding should now be used to protect providers' mission and very survival. These are among the key findings of a new Massachusetts Hospital Association (MHA) white paper released today.

The MHA report, entitled "Massachusetts Hospitals: Critical to the Commonwealth and Threatened in the Economic Downturn," lays out in clear and convincing terms:

• The case that Bay state hospitals serve as employers of choice and engines of economic growth for both the local and statewide economies;
• The systemic decline in hospital finances, particularly during the current economic downturn;
• The erosion of the Massachusetts Healthcare Reform promise to align provider payments to the cost of care; and
• How the $3.09 billion in federal Medicaid funding that will flow to Massachusetts over the next two years can help resolve the problem.

According to the white paper, created by MHA's Healthcare Finance staff and based on the most current independent data:

"Difficult decisions must clearly be made to resolve the state's current fiscal emergency. But the MassHealth cuts are of such magnitude that hospitals and other providers cannot absorb them without affecting their mission, employment, current patient needs, and investments for tomorrow's patients. To prevent unintended consequences, the state should use the significant new federal Medicaid revenue to restore and prevent Medicaid and healthcare budget cuts."

The 10-page report details the importance of Massachusetts hospitals to their communities, and shows how the "multiplier effect" of hospital jobs benefits the state's workforce. Although the healthcare sector has always been a stabilizing force in the state's economic downturns, the recent instability of hospitals is especially troubling; the damage being done to hospitals through budget cuts and underfunding is making it more difficult for Massachusetts to rebound economically, according to the report.

One of the key tenets of healthcare reform is closing the gap between what healthcare costs and what government pays providers for that care. Governor Patrick recently proposed restoring an estimated $40 million in recommended Medicaid cuts to hospitals, but providers are still facing overall reductions of $315 million.

Each million dollars cut from healthcare revenue translates to about 16 hospital jobs. These jobs have a "multiplier effect" of two, with each hospital job supporting another job in the state's economy. So the Administration's remaining proposed Medicaid cuts could mean more than 10,000 lost jobs in Massachusetts.

A section of the report is dedicated to a detailed analysis of recent state healthcare policy, and another to the unprecedented opportunities afforded by the Medicaid relief contained in the federal stimulus package.

Using more federal stimulus revenue to restore and prevent Medicaid and healthcare budget cuts throughout the state will preserve the excellent provider access so important to our patients and communities, and spark effective stimulus to the state's overall economy.

"We want to show that supporting hospitals - at a time when we're undertaking important cost-cutting strategies - is wise economic and healthcare policy," said MHA President & CEO Lynn Nicholas, FACHE. "Right now, with the federal recovery package, we have the opportunity to resolve the issue now and for the future."

MHA Report: Bay State Hospitals Key to Massachusetts' Recovery, but Viability is Threatened by Economic Downturn & State Cuts (Microsoft Word Document)
Massachusetts Hospital Association (MHA) white paper (Adobe PDF File)