As state cuts budget, Illinois rural hospitals bleed

  1. Perhaps a dozen Illinois community hospitals could be facing closure in the next decade thanks to shrinking state budgets and the resulting millions in cuts in state Medicaid payments.

    Chicago Tribune, Jan. 2, 2002
    By Crystal Yednak
    Tribune staff reporter
    Published January 2, 2002

    The people of Hoopeston fought hard to hold on to their small hospital, banding together a decade ago to raise $500,000 to prove to a federal agency how much they wanted to keep it in town.

    But now, as urban and rural hospitals brace for the impact of state cuts that will slash millions in Medicaid payments to hospitals to make up for budget problems, health care officials are worried that Hoopeston Community Memorial Hospital could be one of perhaps a half dozen rural Illinois hospitals to close its doors in coming years.

    "We're trying to make decisions to keep this hospital going," said Russ Leigh, an accountant in downtown Hoopeston who is a volunteer board member. "But all the decisions we make as board members mean nothing when the governor takes this money away."

    Facing a $500 million budget shortfall, the state cut out a total of $125 million in payments to hospitals for treatment of Medicaid patients over the next six months.

    The cuts mean that starting Tuesday, hospitals got about 55 percent of what they were getting just the day before for every Medicaid patient who walked into the emergency room.

    Before Tuesday, the hospital received $246 from the state every time it treated a Medicaid patient in an emergency room situation.

    Now the hospital will be reimbursed $135.

    Urban hospitals, which also treat a large percentage of Medicaid patients, are being hurt too. Northwestern Memorial Hospital, for example, estimates it will lose $9 million a year.

    But rural hospitals and the people they serve are being especially hard hit, experts say, because they often lack the privately insured patients to shift the costs to. They also treat a significant number of patients through outpatient services, which is where the cuts are especially deep.

    When these hospitals close, it can mean patients have to drive an hour more to get medical care.

    Priorities questioned

    Hospital officials say they are frustrated when they see millions of dollars in legislators' local projects, commonly known as pork, go untouched when budgets are cut. They don't understand why the legislature allowed funding for hospitals that treat Medicaid patients to be put on the chopping block instead of taking action to open other parts of the budget up. They are also frustrated by politicians saying that even with budget cuts, no services to Medicaid patients will be affected.

    By law and by mission, hospitals will provide care to everyone who shows up on their doorstep, regardless of payment. But because of the cuts, hospitals will have to cut programs and services and increase costs to privately insured patients to account for the difference, hospital managers say.

    "With these cuts, it's going to be difficult not to make some kind of cut somewhere that's not going to affect patient care," said Randy Dauby, chief executive officer of Hamilton Memorial Hospital District in McLeansboro.

    Hamilton Memorial is considering doing away with paying for an on-call surgeon for emergency operations. Some communities are worried about losing hospitals entirely. Tubal ligations for public aid patients may not be available in some areas.

    Hospitals were notified of the changes in late November, given a hearing the Friday before Christmas and informed of the state's final plan Monday before the cuts went into effect Tuesday. After impassioned pleas from hospitals, the Department of Public Aid added a provision to its final plan Monday to speed up payments to hospitals that are facing cash-flow problems.

    "Absolutely we understand these cuts are hitting the hospitals disproportionately and we understand the effects they're having," Public Aid spokeswoman Ellen Feldhausen said.

    Because the legislature would not cooperate with legislation opening up other parts of the budget to funding changes, Gov. George Ryan and his administration argue that they couldn't soften the blow to Medicaid payments.

    "The General Assembly left the governor with no choice in making these cuts in the Medicaid program and in which parts of the Medicaid program he was able to cut," Feldhausen said.

    A spokesman for House Speaker Michael Madigan said that difficult cuts had to be made to correct the budget and he would be open to listening to any proposals once the legislature is back in session Jan. 9.

    The Illinois Hospital Association plans to offer some suggestions. It estimates that as hospitals implement the cuts, at least half a dozen small hospitals will close their doors in the next two years and the same number will be pushed to the brink.

    For Hoopeston, the cuts mean at least $100,000 less for the hospital. For Hamilton Memorial Hospital, it will be a hit of about $93,000.

    The numbers may not seem huge, but when slashed from hospitals that were not breaking even, that were dealing with Medicare reductions and the already low Medicaid reimbursements, the changes could be fatal, officials said.

    More than 1.6 million low-income Illinois residents receive care each month through the Medicaid and KidCare programs. The state gave hospitals about 75 percent of the costs of care, ranking Illinois 46th in the nation in the level of reimbursement, according to the American Hospital Association.

    Hospital officials say they expected some reductions because of the budget problems.

    "We're willing to pay our fair share. But make it a fair share. Not all of it," said Keith Heuser, chief executive officer of Memorial Hospital in Carthage.

    Located about 115 miles south of Chicago, Hoopeston's hospital looks like a 1960s school building, with mint green and peach colored bricks lining the halls.

    There is no pharmacist. Instead, a computer station dispenses drugs to authorized staff. There are still rotary phones in sight. The director of the lab draws blood. The staff does its own collection work, making residents sign a paper agreeing to make payments but not turning them over to a collection agency.

    Hospital plays big role

    But as the largest employer in a town with a water tower boasting the title "sweet corn capital of the world," the hospital is also a stone in the community's wobbly foundation.

    Mayor Chalmers Flint is ready with a pitch for any business that has even a passing interest in taking over one of the empty plants in his town of 5,965,and having a hospital helps.

    "That gives us security and comfort knowing it's there," Flint said.

    The emergency room, though aging, is still there when a child comes down with a 104-degree fever in the middle of the night or a farmer is injured in an accident. People with serious trauma can be flown by helicopter to a larger hospital once stabilized at Hoopeston.

    "When you're in trouble you need help right away," said Forrest Anderson, whose family has lived on a farm in nearby Rossville since 1955.

    In the last decade, a number of rural hospitals in the area have closed. The remaining ones are 30 minutes to an hour's drive away on two-lane roads. "People think hospitals will always be there," said Barbara Dallas, senior director of rural hospital services for the Illinois Hospital Association.

    "But hospitals are going to close. Services will be discontinued," she said. "And then it will be too late."

    Copyright 2001, Chicago Tribune
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