Small hospitals endangered by Medicaid cuts

GOLDENDALE, Wash. -- John and Faye Bostick have it better than most of the other Golden View Terrace residents seated around them in the dining room during lunch.

If the assisted-living facility closes due to threatened state budget cuts -- and it might -- they have the money and energy to rent their own apartment and hire a caregiver. Most of their neighbors have fading minds, serious health problems and few family members in the area. Faye Bostick helped another woman put on a bib before sitting down herself.

"They'll have to find someplace else for them to go," said Faye, 75.

Where?

"I have absolutely no idea," said Pat Scarola, administrator of the center owned by Klickitat Valley Health, eastern Klickitat County's public hospital. The county has no other assisted living center or nursing home.

As one of many cost-cutting proposals to close a looming budget shortfall, the Legislature is considering reducing Medicaid reimbursements to 38 rural hospitals.

The move, laid out in House Bill 2130, would remove cost-based reimbursements for Medicaid patients treated at federally designated critical access hospitals, those located in areas that are so remote, patients have no other choice for care.

The hospitals rely on Medicaid payments for an average of half their annual revenue. They often are among the largest employers in poor counties and account for the majority of physicians in town.

In 1997, at a time when rural hospitals were failing, Congress developed the critical access program to boost their reimbursement rates from Medicaid and Medicare, the subsidized health programs for low-income people and seniors.

Currently, reimbursement rates for those critical hospitals are set more closely to the true cost of treatment rather than what Medicaid pays, which can be significantly below cost.

In larger cities, hospitals have enough privately insured patients to make up the loss. Not so in places like Goldendale.

The measure would save the state $34.5 million in Medicaid costs -- about 3 percent of the state's Medicaid spending. The federal government matches that amount, putting a total of $69 million of revenue on the line.

Many of the rural hospitals would for sure have to trim or even eliminate services. Some have said they might close completely, said Cassie Sauer, a spokeswoman for the Washington State Hospital Association.

"We think this is absolutely devastating," she said.

South-central Washington's four critical access hospitals stand to lose up to 12 percent of their revenue. Those hospitals ar Sunnyside Community Hospital, Kittitas Valley Community Hospital in Ellensburg, PMH Medical Center in Prosser and Klickitat Valley.

Sunnyside Community Hospital officials have not determined how they will react if the bill passes as part of a new state spending plan being fashioned by the current special session in Olympia.

"It's hard to budget when you don't know what you're going to be working with," chief executive Jon Smiley said.

Friday, Smiley joined other hospital administrators and employees in Olympia to testify against HB2130 before the House Ways and Means Committee.

"Taking away cost-based reimbursements would be devastating," said Smiley, who has been a hospital administrator for 47 years.

Kittitas Valley Community Hospital would be fine for a few years, but may have to streamline down the road, said CEO Paul Nurick.

Prosser hospital employees have already received pink slips. Anticipating cuts of some degree, authorities of the public hospital district last month laid off an undisclosed number of employees.

"There are no two ways about it, there's going to be cuts," said Fred Lamb, hospital spokesman.

Though the Prosser hospital is releasing few details about the cuts, the lost positions came mostly from support staff, which includes housekeeping, food services and maintenance, plus nurses in the hospital's off-campus clinics, Lamb said.

To stay afloat, Klickitat Valley may have to close its assisted-living center and its ambulance service, said CEO John White. He stressed, however, that the board has not laid out any course of action yet and that the Legislature has 30 days to come up with a budget.

The public hospital subsidizes the two auxiliary services at a combined rate of about $1 million per year. Together, they have 23 employees.

The Medicaid cuts would cost the hospital more than twice that amount, leaving White with the prospect of laying off another 25 employees and trimming the entire remaining budget by 10 percent across the board.

"There just aren't too many other places to go shopping" for cuts, White said.

Klickitat County already has one of the highest unemployment rates in the state.

Brad Knowland, an EMT with the ambulance service that responds to an area of more than 1,000 square miles, said the state should make cuts in other areas before emergency services.

"Street cleaners are great but they're not going to save my life," he said.

* Ross Courtney can be reached at 509-930-8798 or rcourtney@yakimaherald.com.