Fasano raises questions about health clinic closings in Branford, East Haven [NHRegister]

June 18, 2015

New Haven Register
State Senate Minority Leader Len Fasano, R-North Haven, blamed Democrats for the planned closing of two Yale New Haven Health System clinics, but the Democratic Senate leader said the decision has more to do with the system’s priority to maintain high administrative salaries and high profits.

Yale-New Haven Hospital spokesman Vincent Petrini said they are hoping to save $1 million with the closings of two clinics.

One, in East Haven, provides urgent care and occupational health services, while the other, in Branford, offers occupational health services in addition to physical therapy.

Petrini said the closures are necessary because of lower Medicaid reimbursements and increased taxes by the state.

“Recent news of local clinics closing as a result of increased burdens on hospitals is exactly the impact we have been warning about. Raising taxes on our hospitals and lowering Medicaid reimbursements are two major hits that together will cripple many small hospitals in our state. The effect is broad and can now be seen on large health organizations, as well,” Fasano said in a statement.

The Republican minority in the legislature voted against the budget, which squeaked by in both the House and Senate

General Assembly is holding a special session at the end of the month to approve several implementer bills to put the $40.3 billion two-year budget into effect, and there is much behind the scenes jockeying to tweak those bills.

The budget has not yet been approved by Gov. Dannel P. Malloy, who has suggested cuts in some of the new taxes after complaints by businesses.

Petrini said they started looking at more efficiencies in February when Malloy’s budget proposal became public and they determined that the East Haven facility, which has only been open for a few years, was not sustainable in any event.

“The decision to close those two clinics was not mandated by any state policy,” said State Senate Majority Martin Looney, D-New Haven.

He blamed it instead on Yale-New Haven Hospital’s “high corporate salary structure and financial bottom line versus the convenience to the public of these two clinics. It’s a matter of internal priorities and not what the state recommended.”

The hospital system has to seek approval for the closings with the Office of Health Care Access. Looney called the timing of the announcement now “suspicious” as the special session dates of June 29 and June 30 get closer.

Petrini said they are looking for places for the 31 employees who would be affected by the proposed closings. He said patients can continue to get services in North Haven and New Haven.

The hospitals have never been happy with the provider tax, which was adopted first in 2012 as a win-win for the state and the hospitals.

In fiscal 2012, the state imposed a $350 million provider tax in order to bring in an additional $200 million from the federal government.

By levying the tax and then returning it, the state qualifies for these federal funds.

The state in 2012 kept $150 million and distributed $50 million to the hospitals, based on a formula it developed, while also returning the $350 million to most of the facilities.

Since then, the $350 million tax has continued to be levied, but with decreasing amounts returned to hospitals. They got back $323 million in fiscal 2013; $231 million in 2014; and are scheduled to get back $96 million back in the current fiscal year.

Next year, the budget that was just adopted increases taxes on the hospitals by $207 million in each year of the biennial budget, with $161 million of that to be reimbursed. That $46 million shortfall, however, is likely to be adjusted with $5 million to $10 million added back as part of the implementer bill.

Fred Carstensen, a University of Connecticut economist, also has been critical of the hospital tax as shortsighted, when it is not fully reimbursed.

Petrini said the Yale New Haven Health System will have to cut about $100 million from its budget over the next two years to be able to absorb the lower Medicaid rates and increased hospital taxes.

The system includes Yale-New Haven Hospital, Bridgeport Hospital and Greenwich Hospital.

Looney and Fasano have been onboard this session with major changes in hospital policies after acting as co-chairmen of the Bipartisan Roundtable on Hospitals and Health Care this year. The bills support a sharing of patient data and more of a level playing field for independent doctors.

Both senators have been critical of the Yale system, the largest in the state, for what they feel is a lack of transparency and alleged anti-competitive practices that concentrate market power to the disadvantage of consumers.

Marna Borgstrom, president and CEO of the Yale New Haven Health System, has defended having a network of doctors and hospitals under one umbrella as the best way to deliver efficient care and rein in the costs of the chronic users of health care.

In the bipartisan study, the senators reported that revenues over expenses by the Yale system increased 280 percent from 2009 to 2013, while they went up 277 percent for Hartford Health Care. Borgstrom has said she doesn’t apologize for the profits, which they put back into the system.

Reports sent to OCHA list compensation for Borgstrom at $3.5 million in fiscal 2014, which includes a benefits package. It was the highest for a hospital administrator in Connecticut.

Six other administrators at Y-NH are compensated at more than $1 million, according to OCHA.

Petrini said Yale-New Haven Hospital is disproportionately impacted by the tax formula, which fully reimburses hospitals that provide up to $50 million in Medicaid services. He said Y-NH provides $180 million “so it gets penalized for doing the right thing.”

He referred to as the “Goldilocks rule,” where hospitals lose out on distribution of funds if they have too few Medicaid patients or too many.

Greenwich Hospital will lose $6.5 million because of the formula, but Bridgeport Hospital will gain $8.8 million in revenue, he said.

Petrini said the direct impact to Yale-New Haven Hospital next year will be $48.5 million in taxes and $10 million from the Medicaid rate cut.

The state has said that it increased the amount it spends on Medicaid from $1.65 billion in 2012 to $1.72 billion this fiscal year. During that time, however, the number of people covered by Medicaid has gone from 592,128 to 728,960.

Hospitals say the rates don’t cover expenses, while state officials contend they are not being transparent about their real costs.