BATON ROUGE — The privatized state hospitals that care for the uninsured are likely to take steep financing reductions over the next four months that could lead to rationed patient care and lengthy wait times for services, lawmakers were told Tuesday.
Jeff Reynolds, chief financial officer for the Department of Health and Hospitals, said the best-case scenario of cuts his agency faces to help rebalance Louisiana’s budget would strip about $130 million from the payments to hospital operators before June 30.
The hospital managers, Reynolds told the House Appropriations Committee, would have to reduce patient care in response, which could cause long delays for appointments. Or he said the managers could scrap their contracts entirely.
“There is a threat that the public/private partners could walk,” Reynolds said.
And that’s if lawmakers gathered in a special session agree to raise taxes and to use the short-term patches proposed by Gov. John Bel Edwards to rebalance this year’s $25 billion budget, which has a shortfall ranging from $850 million to $950 million.
Reynolds said even with the money that would be raised from the governor’s proposals, the health department faces a $64 million cut before June 30, which grows to $169 million with lost federal matching cash. The health department will start making the cuts next week.
Much of that will be levied on the hospitals, Reynolds said.
Jared Stark, CEO of the state-owned hospital in Lafayette, said the likely cuts “would drastically reduce services.” He and other hospital managers wouldn’t commit to whether they would continue with the deals if the reductions happen.
If the privatization deals fall apart, LSU — which previously ran the facilities — would have to take over the services, though it is unclear how they would manage the hospitals or the uninsured services that have been shifted to private hospitals.
In addition to the hospital cuts, Reynolds said mental health facilities will suffer cuts and a pediatric day care program that cares for “medically fragile children” will be shuttered.
“It saddens me that we’re in this situation,” said Rep. Patricia Smith, D-Baton Rouge.
Other Appropriations Committee members pushed back on the way the health department intends to divvy up the slashing.
Rep. Tony Bacala, R-Gonzales, asked if the agency could instead shrink spending on travel, training and major repairs at state health facilities. He also suggested Medicaid patients could be charged co-pays for their services to limit costs.
Lawmakers, including Rep. John Schroder, R-Covington, bristled at the plan to close the pediatric health care program, which Schroder said helps severely disabled children.
The program has ballooned with questionable costs, and it appears many of the children assigned to receive services don’t need that intense level of care, Reynolds said. He said it looks like the program is being abused by health care providers.
“We’re going to cut the whole program because we didn’t manage it properly?” Schroder asked. “I think it’s just disgraceful.”
The worst-case scenario without tax hikes, Reynolds said, would end all payments to the safety net hospitals for the next four months, a cut of about $350 million, and could force closures across a wide array of programs for the elderly and disabled.
No tax increases have received legislative support so far. Republicans in the House, where tax hike legislation must originate, say they want to look for deeper cuts in state services before turning to taxes.
The Senate Finance Committee on Tuesday began advancing Edwards’ measures to tap into the “rainy day” fund and redirect Gulf oil spill recovery money to help plug $328 million in holes in this year’s budget. Those pieces of legislation head next to the full Senate for consideration.