CHKD could be hit hard by latest state budget

Now that the dust is settling on the state budget, local hospitals are gauging the impact on their facilities, and at least one, Children's Hospital of The King's Daughters, will continue to fight for more funding.

The state budget reduces Medicaid reimbursements by 3 percent in the next fiscal year, and 4 percent in the following one. Federal money is expected to make up for most of that.

Hospitals with larger percentages of Medicaid patients, however, still would bear a bigger share of the pain, because reimbursements don't cover the full cost of care.

CHKD President and CEO Jim Dahling said he had hoped that local legislators would provide a measure in the state budget that would have mitigated the estimated loss of $2 million the children's hospital expects to shoulder during each of the next two fiscal years.

However, that measure, which was an adjustment to payments the hospital gets because of its high Medicaid population, did not get included, which Dahling characterized as an oversight.

Del. Chris Jones, R-Suffolk, said he will continue to fight for more funding for CHKD, however, and is hopeful that can happen before Gov. Bob McDonnell signs the budget into law.

At CHKD, Medicaid pays for 53 percent of patient visits. That's higher than the norm because children are more likely to qualify for Medicaid than adults. The local acute care hospital with the next-highest percentage is Sentara Norfolk General Hospital, where Medicaid covers 20 percent of patient visits.

Chris Bailey, senior vice president of the Virginia Hospital & Healthcare Association, said hospitals that serve children, hospitals with trauma centers, and rural hospitals in low-income areas tend to have the highest Medicaid populations.

He said his organization is worried about obstetrical units in small, rural hospitals. He said 10 obstetrical units have closed across the state during the past seven years. Many obstetrical units in rural areas have a low volume of patients and a high number covered by Medicaid, which makes it economically unfeasible to continue operating.

Bailey and some local hospital officials say they are relieved that early budget proposals, which had far larger cuts to Medicaid, did not go through. Still, Medicaid does not cover the full cost of care, and coupled with inflation, health care providers say, they will continue to lose money on Medicaid patients.

Rob Broerman, Sentara senior vice president and chief financial officer, said his hospital system's overall Medicaid patient load is 14 percent. He said the system is still crunching the numbers to see how the Medicaid cuts will impact them. If federal funding comes through, he said, the hospital system will be able to handle the cuts without layoffs.

"It definitely could have been worse," Broerman said.

Elizabeth Simpson, (757) 446-2635, elizabeth.simpson@pilotonline.com