The State of Illinois’ revenues declined dramatically after the events of September 11, similar to most other states and businesses around the nation.
Consequently, the State believes it needs to reduce expenditures approximately $500 million to balance the state budget.
At the time of this writing, the governor is proposing to cut Medicaid payments to hospitals by some $240 million statewide. This means almost 50 percent of the cuts are being made on the hospitals that treat the people who need these services the most.
Unfortunately, the State of Illinois does not view its commitment to address the needs of this growing population as a priority. The Medicaid reimbursement rate provided by the State of Illinois is the 48th lowest in the U.S., and this is the 8th consecutive year Medicaid payments have been reduced by the state.
It is extremely disturbing that whenever state funds become tight, the health care industry bears the largest burden.
What has not received much attention is how Medicare has reduced its reimbursement for Medicare outpatients. With the recent announcement the U.S. would likely be in deficit for three years because of the war on terrorism, it is very likely hospitals (and other health care providers) can expect more reductions in Medicare payments beginning October 2002.
These reductions in reimbursement will likely have a significant impact on our community’s second largest industry—health care. The University of Illinois College of Medicine at Peoria will see less financial support. Peoria’s hospitals stand to lose approximately $7 million just on the governor’s proposed reimbursement reductions for Medicaid outpatients. The reduction is higher when considering reductions on Medicaid inpatient reimbursement.
Methodist Medical Center is projecting for 2002 to receive 10 cents on every $1 of care provided to Medicaid outpatients. I presume OSF and Proctor Hospital’s payments are similar. In 1997, Congress passed the Balanced Budget Act which reduced Medicare payments to Peoria hospitals more than $50 million over five years. Imagine the impact on this community if Congress passes a similar act next year.
Our region is also negatively impacted. Rural hospitals are much more adversely impacted under the Medicaid reductions as they depend more on Medicaid. Ten rural hospitals are prepared to announce closing their doors in 2002 if the reductions are approved, according to the Illinois Hospital Association. If rural hospitals in our region close or have greater difficulties, Peoria hospitals will be impacted adversely.
In Peoria, our poverty rate continues to be a concern. As the poverty rate increases, more people need Medicaid, increasing the burden on hospitals and other providers.
Despite the hospitals’ best efforts to establish mission-driven sites to address the needs of the poor and indigent, such as Methodist’s Carver Center and OSF’s Mother Francis Krasse Family Health Center, the three Peoria hospitals’ collaboration with physicians through the Heartland Clinic, and the tremendous residency programs at Methodist and OSF, continued cuts threaten the economic impact and economic contributions our industry can make for the enhancement of our community.
Is there anything we can do? We will continue to need tremendous support from all our legislators to present a more balanced perspective and reasonable approach to these reductions in reimbursement. There may be times when we will need community leaders to become involved. Ultimately, Peoria and the region need a growth strategy and meaningful economic development to occur. IBI
