Hospitals face financial unknowns

Public policies and external factors are jeopardizing our local health care environment

For 120 years, Cheshire County residents have insisted that exceptional health care, close to home, be a priority of the community.

Today, Cheshire Medical Center/Dartmouth-Hitchcock Keene is an award-winning, nonprofit medical center providing a broad array of services usually not found in a community our size. Our initiatives to keep our population healthy, such as Vision 2020, are unique and demonstrate our level of commitment to promoting health across our entire region’s population.

But over the past few years, public policies and external factors have negatively impacted our budgets and are now jeopardizing our local health care environment.

The decisions being made related to the funding of New Hampshire’s Medicaid program represent a significant problem. The actions taken are numerous and complex, but the net effect is that, after accounting for our recent $5.3 million Medicaid Enhancement Tax payment, the state of New Hampshire ends up paying essentially nothing for its Medicaid patients to receive care at this medial center.

Cheshire County is the only county in New Hampshire that does not have a Federally Qualified Health Center or other community health center to share in serving the medical needs of our most vulnerable community members, leaving that responsibility solely to Cheshire Medical Center/Dartmouth-Hitchcock Keene.

In contrast to the state’s sudden implementation last year of the changes to the Medicaid Enhancement Tax, we have been anticipating changes associated with federal health reform for some years.

We accept that fee-for-service medicine, the underpinning of the Medicare program since its inception, is not sustainable. We have become an early adopter of the accountable care model, and will actively seek global reimbursements to replace fee-for-service as quickly as the health care financial system can adapt along with us.

That said, we anticipate our Medicare reimbursement is likely to decline by several million dollars over the next two to three years — a reduction in revenue which will be difficult for us to absorb, particularly on the heels of the continuing multi-million dollar burden of the Medicaid Enhancement Tax.

For this medical center to succeed, our health system must rise to meet the challenge of declining payments. We need to further strengthen our operations so that we continue to be a sustainable health system for our community. To do so, it is imperative that we reduce our expenses. We have recently challenged ourselves to cut $7 million from our budget over the next 18 months, an amount representing 3 percent to 4 percent of our budget.

Our current planning includes realigning and refocusing our operations, cutting non-salary expenses, reducing our workforce and programs, and strengthening partnerships.

We are encouraged that the initial state budget proposal for the 2013-14 biennium includes a request from the Department of Health and Human Services to restore the funds taken away through the Medicaid Enhancement Tax and Disproportionate Share process. This is a good first step, but it is tempered by the fact that our governor-elect has warned the state cannot reverse all of the budget actions previously taken by the Legislature, and the governor-elect has yet to make as strong a commitment to restoring hospital funding as she has to restoring funding to other sectors.

To be clear, reinstatement of this funding will not prevent change in our local health care environment. We rely on many other sources of payment which are also evolving and tightening. Fortunately, Cheshire Medical Center/Dartmouth-Hitchcock Keene has a long tradition of responding proactively and creatively to these challenges, thanks to our talented and resilient staff, physicians and associate providers, and is prepared to do so again.

Without restoration of the Medicaid Enhancement Tax funds, however, our cash flow will continue to be stretched to the breaking point and difficult choices will be necessary.

Please join us in advocating for a new state budget plan which addresses the long term needs of our vital health care resources by restoring funding to adequate levels.

Arthur W. Nichols is president and chief executive officer of Cheshire Medical Center. Dr. Don Caruso is medical director of Dartmouth-Hitchcock Keene. This article was originally published in The Keene Sentinel.