Tax impact on Bristol Hospital much less than first feared [Bristol Press]

May 3, 2011

Bristol Press
Story as it appeared in the Bristol Press on May 2, 2011

BRISTOL — A new tax formula will spare Bristol Hospital the crippling blow it faced earlier this week, hospital and state officials said Friday.

Instead of facing a hospital tax of $3.1 million, the tax as it now stands would be $114,000.

“That’s absolutely fantastic for the hospital and for the community,” said Bristol Mayor Art Ward. “It eases the burden on the hospital and ensures that the services needed within the community will be delivered as they have in the past.”

Hospital President Kurt Barwis said the new figure, while it will still pinch, won’t have the devastating impact that the old formula would have had on the community institution.

“We’re still doing our fair share,” said Barwis, adding, “Where we’re at is palatable.”

The state’s new formula was adopted after Bristol Hospital supporters voiced strong objection to the previous one.

“People stepped up,” said Barwis, who met this week with Commissioner Benjamin Barnes of the Office of Policy and Management about the impact of the tax.

Barwis also credited the efforts of Bristol’s legislative delegation, hospital employees who wrote letters of support and others who went to bat for the community hospital.

“Everybody on our team played an important role in getting it resolved,” state Rep. Frank Nicastro, a Bristol Democrat said.

“It’s come a long way. We all jumped on it because we knew it was wrong.”

As now written, the tax formula exempts six hospitals that have had net losses over the last five years — including Bristol Hospital — from paying tax on outpatient services.

Anne Foley, an undersecretary at OPM, said her office hopes this will be the final version of the hospital tax.

She said the change was designed to reduce the number of hospitals that lose money under the new tax, as well as to reduce the size of the losses.

State officials believe the new model will meet with federal approval, according to information provided by Foley.

In addition to the new tax, Bristol Hospital still stands to lose $644,000 from the elimination of the state’s uncompensated care pool, said Barwis.

While lobbying efforts will lessen in intensity, hospital supporters said they’re going to stay vigilant until the deal is done.

“We just don’t know. This thing has changed so many times,” Barwis said. “It’s not over till it’s over.”

State Rep. Whit Betts, a Bristol Republican, said he’s pleased with the changes in the tax.

“I applaud everybody’s efforts,” Betts said. “We had a real positive outcome.”

If enacted, the other formula could have brought catastrophic consequences in cutbacks at the hospital, Betts said.

“They employ 900 people,” Nicastro said. “The last thing we want to see is more layoffs.”

Barwis said the tax itself ought to carry with it a sunset provision so it isn’t a permanent burden for hospitals.

The state should also commit to modernizing the Medicaid payment system, so hospitals get reimbursed in a more equitable way, Barwis said.