Hospitals Need Lawmakers to Step Up

September 28, 2015

Op-ed as it appeared in the Stamford Advocate

As Senate Minority Leader, I am joining many of my colleagues in the general assembly calling for a special legislative session to override Gov. Dannel P. Malloy’s devastating hospital cuts.

Together, we are standing up for health care access and quality. We are standing up for the elderly, those on Medicaid, and those with mental health needs who will lose services. We are standing up for hospital employees who will lose their jobs. And we are asking other legislators to join us.

In June, Democrats joined Republicans in challenging Gov. Malloy and restored funding the governor originally cut from hospitals in his February budget. I applaud those Democrats who had the courage to speak out.

Now the governor’s cuts are back and even greater than before. Hospitals stand to lose more than $500 million — $143 million more than the cuts the governor proposed in February — the same cuts Democrats and Republicans alike condemned.

Even before the new cuts, hospitals were being forced to lay off workers and close clinics. Hospitals depend on doctors, nurses, and other staff to deliver care. Sixty percent of hospital operating cost is attributable to labor. This means $300 million is being cut from labor, equating to more than 4,000 employees using industry average wages and benefits. Losing so many health care workers will be devastating. More facilities will close, patients will lose access to care, employees will lose jobs and communities will suffer.

The governor’s justification for targeting community hospitals is twofold: (1) Hospitals are making plenty of money and (2) Hospital executives are paid too much.

The governor likes to cite the 6 percent “profit” that hospitals make. This global figure is misleading. Even before this year’s cuts, half of all hospitals had margins of less than 3.5 percent, below what experts agree is necessary for hospitals to adequately invest in their future and some have experienced multiyear operating deficits. While some hospitals are doing OK, most aren’t and more will be pushed into the red by these cuts. Those most vulnerable are in underserved areas where access will suffer if they close.

As nonprofit providers largely funded by public dollars, hospitals are obligated to ensure executive compensation is reasonable and to share burdens. This is a legitimate issue of concern. However, there is no executive salary solution to the bigger crisis of underfunding our health care system. The total cost of all hospital CEO salary and benefits statewide is about $28 million. Even if you cut that in half, you would save $14 million … and then what?

For the governor to suggest that, by simply cutting executive pay, hospitals can absorb his cuts and taxes without significantly reducing services and jobs is disingenuous if not outright dishonest. For policymakers to hold the entire industry hostage and refuse to address this crisis because of the excesses of a few is reckless and misguided.

The governor has made it clear he thinks we have too many hospitals. He seems content to tax them indiscriminately until many fail and few survive. This is a strategy designed more to get through the current budget cycle than promote quality health care.
I do not believe this represents the policy of the legislature. Democrats and Republicans alike in communities such as Windham and Bristol, where hospitals are already cutting services and laying off workers, have expressed deep concerns. But unmitigated, the governor’s cuts will cause similar crises in communities throughout the state.

This is why we need a special session to restore funding. The time has come for us all to sit around a table together and have a responsible discussion about what kind of health care system we want, what we expect from it and how to fairly fund it.

Senate Minority Leader Len Fasano represents the 34th Senatorial District, including Durham, East Haven, North Haven and Wallingford.