Twin Cities health systems are hemorrhaging jobs by the hundreds, but observers in Minnesota say the states hospitals are likely to slash payrolls even deeper if state funding cuts are allowed to stand or grow even larger.
Steeper job cuts expected if Pawlenty doesn’t relent
Gov. Tim Pawlenty has vowed to cut millions in human services funding by July 1, and last month vetoed $381 million in spending for the General Assistance Medical Care program for low-income state residents. Those funding cutswhich may eventually be challenged in courtcame on top of reductions in reimbursement rates for hospitals and nursing homes approved by the Legislature.
The states two-year budget cycle gives state lawmakers until July 2010 to find a way to reinstate funding for the general-assistance medical program, which by then is expected to have a service population of 35,000 Minnesotans who earn less than $8,000 a year. Weve got a year to figure out another alternative, said Lawrence Massa, president of the Minnesota Hospital Association. The fact that the governor made the veto only in the second year of the budget cycle shows his willingness to talk about compromises.
Officials in the Department of Human Services said that if funding is not reinstated, program participants are expected to move from the state-funded general-assistance program to MinnesotaCare, a similar program funded by hospital taxes, federal reimbursements and user fees.
Massa said the funding cut, if allowed to stand, would force hospitals to cut thousands of jobs in response. But its not clear how the Democratic-controlled Legislature would raise the money with a tax-wary Republican in the governors mansion. Pawlenty announced last week he would not seek a third term as governor.
There are many people who have said they think the governor is not as interested in the welfare of the state as he is in his personal future, said state Sen. Linda Berglin, Democratic chairwoman of the Senate Health and Human Services Budget Division Committee. You dont get a state out of a recession by cutting jobs, and this will cut a lot of jobs. With cuts this massive, theyre not going to be able to be cost-shifted.
The state hospital association said that if all $381 million in general-assistance funding was absorbed through hospital personnel reductions, it would result in about 7,600 lost jobs with average total compensation of $50,000. Large systems in Minneapolis and St. Paul have cut more than 1,000 jobs in the past year, including 433 since April, because of rising levels of uncompensated care and declining utilization.
Last month, 424-bed North Memorial Health Care, Robbinsdale, said it would cut 100 jobs on top of 380 job cuts announced in December. At 431-bed public Hennepin County Medical Center, Minneapolis, administrators said they are cutting 100 jobs by the end of June, after a reduction of similar magnitude in February. In April, St. Louis Park-based Park Nicollet Health Services announced layoffs of 233 employees in its third round of job cuts since December. The state hospital association said its hospitals have cut more than 2,000 jobs since the fall of 2008.
Pawlentys spokespeople did not return calls for comment. But during a June 2 news conference on his decision not to run again, the governor rebuffed questions about the effects of his budget decisions. It is not unreasonable in these economic times to have your revenues reduced by a few percent. And anyone who tells you different is living in a different world, he said. We have to make the hard decisions on spending, which is no different than any family has to do.
Lynn Abrahamsen, CEO of Hennepin County Medical Center, said the actual and threatened funding declines are forcing administrators to consider cutting not just staff, but entire service lines. There is just no program to be taken out that will not affect a population we serve or a mission we are steadfast in supporting, Abrahamsen said. We are running pretty lean and mean these days, and there is nowhere to go with the large-scale numbers we are talking about here.
The governor used what observers have described as a novel legal maneuver to wrest control of state funding decisions from the Legislature. Minnesota has a constitutional requirement for a balanced budget, and has a statute on the books that allows the governor to unallot funding from state programs in order to balance the budget.
Minnesota Hospital Association spokeswoman Jan Hennings confirmed that her associations counsel is investigating whether there are any parallels between the situations in Minnesota and California, where two federal lawsuits in 2008 resulted in temporary injunctions against reimbursement rate cuts. The lawsuits, which are ongoing, rested on the legal premise that legislators failed to consider whether the cuts would damage the quality of care provided to recipients of publicly financed health plans, according to summaries of the cases provided by Hennings.
Pawlenty has refused to speculate on how he will unallot more than $2 billion in deficit spending. But he has cited publicly subsidized healthcare as one of several areas likely to see some cuts.
Observers say the governor is probably aiming to cut $250 million from the human services department, because that was the amount of cuts he told the Legislature to make last month.
Abrahamsen, who shared the view that the governor is going to cut $250 million, said her hospital is still finding itself lobbying the governors staff after the supposed conclusion of the budget session. We are still trying to get our new equilibrium with these cuts, and any further cuts would be quite devastating, she said.
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