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Conn. hospitals blame change in state tax policy for staff cuts, falling income


By Rachel Landen
Posted: March 12, 2014 - 2:00 pm ET
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Hospitals in Connecticut cut more than 1,400 jobs in 2013 as operating income dropped $175 million for the year, according to reports this week from the Connecticut Hospital Association, which represents 28 of the state’s 29 acute-care hospitals.

Last year's 2% cut in Medicare funding as part of the federal sequestration and a $103 million drop in state funding contributed to hospital losses in the state as did a change in the state's hospital tax policy, the association noted.

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In the past, Connecticut hospitals paid a quarterly state tax on net patient revenue but they received all of the funds back in the form of reimbursements. But in 2013, to help mitigate a state budget deficit, $101 million of the tax was not returned to hospitals. For 2014, the amount the state will keep from the hospital tax is estimated to be about $235 million, according to the association.

“The tax means providing care with even fewer resources, affecting access and services for all patients,” the Wallingford, Conn.-based organization said in a release. Last year’s drop in reimbursement from the state has meant eliminating 1,400 positions, reducing staff salaries and benefits, cutting back on services, and postponing investments in technology and infrastructure, the associated reported.

The advocacy group is asking lawmakers to phase out the hospital tax over a five-year period. A public hearing of the Finance, Revenue and Bonding Committee is schedule for Thursday to discuss a bill that proposes phasing out the tax.

Follow Rachel Landen on Twitter: @MHrlanden


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