Health Care

Legislature cuts $160 million from South Florida hospitals

Jackson Memorial Hospital will see a cut of $32.5 million to the Medicaid program in the state budget that goes into effect July 1, 2017.
Jackson Memorial Hospital will see a cut of $32.5 million to the Medicaid program in the state budget that goes into effect July 1, 2017. Miami Herald file photo

State lawmakers have agreed to cut $160 million from South Florida hospitals under a budget the Legislature plans to pass early next week.

Statewide, the proposed hospital funding cuts total $521 million for the year that begins July 1 — all coming from a combination of Florida’s general revenues and the federal government’s matching funds under the Medicaid program. But almost a third of the cuts will impact hospitals in Miami-Dade and Broward counties.

Cuts would be deepest at the hospitals that take on the largest number of Medicaid patients and the uninsured, particularly public hospitals.

In total, Memorial Healthcare System in Broward County is looking at $26.6 million in budget cuts. Broward Health, whose legal name is the North Broward Hospital District, is looking at about $24.3 million in cuts. And Miami-Dade’s Jackson Health System, the state’s largest public hospital with the greatest number of Medicaid patients each year, faces a $32.5 million cut.

Hospital cuts will be larger in future years, beginning July 1, 2018, when the statewide total is projected to be closer to $650 million a year.

“We’re disappointed that the Legislature felt they needed to cut $651 million from hospital reimbursement rates,” said Tony Carvalho, president of the Safety Net Hospital Alliance of Florida. “However, there was an attempt to mitigate the impact on safety net hospitals and we won’t know the final impact until the terms and conditions on Low Income Pool are adopted.”

Lawmakers, too, are banking on the Low Income Pool, a pot of money to repay hospitals that care for people who cannot afford to pay and don’t have insurance. The federal government gave the state permission to revive the program this year, but it isn’t yet clear how that fund would be dished out to hospitals or even how much money will be in it.

If local hospital districts are able to raise enough money to draw down federal funds, the pool could hit a maximum of $1.5 billion a year. In that case, says House Appropriations Chairman Carlos Trujillo, R-Miami, hospitals may come out ahead.

“Now all of a sudden with LIP coming back into play, the question is do they still need that much money?” he said. “If it’s what we expect, next year, we could probably cut money and they’ll still be held whole. So it’s just shifting the burden more to the federal government.”

But hospital executives said it was too early to tell how the reductions would impact them — in part because of the uncertainty surrounding terms and conditions for LIP.

“The governor was able to secure $1.5 billion from the federal government, but those dollars haven’t flowed anywhere because no one knows the methodology,” said Aurelio Fernandez, CEO of Memorial Healthcare System in Broward County.

The current LIP program sunsets on June 30, and Fernandez said hospitals hope to receive more details on how those funds will be distributed before then.

Fernandez said the opacity on LIP has placed all public hospitals in a “waiting pattern” but he vowed that Memorial Healthcare, which runs six hospitals as part of the South Broward Hospital District, would not reduce services or lay off employees.

Still, he said, Memorial would have to reconsider capital investments in infrastructure if the cuts are deep. “Building will take additional consideration,” he said, “but day-to-day operations … that in no way is going to be compromised because of these cuts.”

Jackson administrators were not available for comment Friday.

The prospect for deeper cuts is on the horizon, as well, as the Legislature has teed up an additional $130 million in statewide cuts the following year, unless lawmakers put additional money into the hospitals next year.

The Florida Hospital Association has warned lawmakers in Tallahassee for months that any cuts could harm patients.

“Adequate funding for Florida’s Medicaid program ensures our most vulnerable children, pregnant women, disabled and elderly people have access to critical healthcare services,” Bruce Rueben, president of the FHA, said Friday. “The Legislature’s decision to reduce more than $521 million from this important program will be felt in communities across our state.”

Contact Michael Auslen at Follow @MichaelAuslen.