High Taxes and Lower Reimbursements Costing Hospitals Dearly

Hospitals in Maine which are facing fiscal crisis will finally find some relief this month on receiving $500 million from the state. Although, the grant from the state may provide some reprieve for the time being to these cash strapped hospitals, permanent remedy for the higher taxes that these hospitals are paying and lower reimbursements for the medical services they are being paid is still not in the sight. Most experts are calling this as nothing but an interim cash infusion by the state.

Jeff Austin, vice president of the Maine Hospital Association believes that the state support of half a billion dollar surely appears to be a considerable amount at the first look but hospitals are forced to pay more in the other ways. This nullifies the positives totally.magnet-2

State hospital taxes have gone up in a big way and cost about $20 million a year, he added.  Furthermore, the recent cut in the outpatient reimbursement rates for Medicaid by 10% costs them additional $15 million to $ 20 million dollars a year. He further added that mandated federal budget cuts that are out into public domain from this year cut Medicare reimbursement rates by 2%. This leads to around $ 20 million extra amount annually.

Thus, the situation is not as pleasant as it appears from outside.

It was after selling the state’s liquor revenue bonds that the state was able to repay a total of $183.5 million in Medicaid reimbursement debt it owed to 39 hospitals. As per the reports from the governor’s office, the state help of $ 500 million will reach to the hospitals latest by this month.

However, the payment by the state will surely improve the sluggish fiscal situation of the hospitals and improve their cash flow, at least for some time. The hospital management can look forward to make necessary capital improvements which have been unfortunately put on the backburner for the past some time.

Expressing anguish on the state of matter in the industry, Rebecca Ryder, President and CEO of 65-bed Franklin Memorial Hospital in Farmington said that hospitals are losing significant amount of cash through other outlets and the incoming financial aid from the state will only act as a provisional relief.

Higher hospital taxes and Medicaid outpatient reimbursement cut approved by the Legislature recently in the month of June is costing hospitals in tune of $1 million.

She added that hospitals in Maine will lose additional $280,000 a year in federal funds for hospital’s ambulance service, which is to begin in December this year. Also, the state is not helping much otherwise, she opined.Hospital-Money-Budget-Funding_jpg_800x1000_q100

Considering the cost of healthcare, numerous other reductions can be observed in the sector since people are less interested in them. But, they are not enough to affect a significant offset.

In order to make up for the amplification in taxes, hospitals are thinking about increasing their revenues by boosting their prices.

Austin maintains that debt is not a long term solution and in no way helps in building new mediums of revenues for the hospitals. But, others those are already too low on working capital claim – something is better than nothing.