Milford Hospital meeting focuses on funding fears

Concerns about the future of state funding for Milford Hospital continue, despite a recent partial restoration of revenue by Gov. Dannel Malloy (D) to funds that he had proposed cutting to compensate for an expected drop in tax revenue in the 2015-16 budget.

During an Oct. 14 meeting at the hospital, State Sen. Gayle Slossberg (D-14) told hospital employees and the board of directors that the state needs to craft a long-term solution to the problem of hospital funding.

Joseph Pelaccia, president and chief executive officer of Milford Hospital, started the meeting by giving a history of the Connecticut hospital provider tax. Pelaccia said the state enacted the tax effective in 2012 as a way to increase federal Medicaid reimbursements.

Pelaccia said the federal government pays states about 50 cents for every dollar they spend on Medicaid. In 2012, he said hospitals paid $350 million in taxes and the state added $50 million to that amount, generating $200 million in matching federal monies for Connecticut. The state redistributed the $400 million to hospitals, and spent the $200 million from the federal government on other programs.

“We were a winner that year. We got more money than we paid in,” said Pelaccia, adding that it was the only year that happened.

Pelaccia said the hospital tax has steadily increased since 2012, and now is $556 million. In 2015, Milford was slated to receive $1,406,000 from the state, which is $652,000 less than the $2,058,000 the hospital is being taxed by the state.

Pelaccia said the state recently projected losing $103 million in capital gains tax revenue, due to a downturn in the stock market, resulting in a state budget shortfall of $63 million. As a result, Malloy cut reimbursements to state hospitals, including $1.4 million to Milford Hospital.

“A lot of the people who work here ask me, ‘Are we going to be around tomorrow?’” Pelaccia said.

When he received news of the cut, Pelaccia said he immediately contacted Slossberg, who put pressure on Malloy to restore funding, and Milford Hospital received $700,000 back.

“She has been extremely supportive of this hospital,” said Pelaccia. “Whenever there is an issue with health care, wherever there is an issue with this hospital in Milford, there are many times she goes against the party line to support this hospital.”

In a press release, Pelaccia commented, “We are grateful that Governor Malloy recognized the devastating impact the recent budget rescissions would have on Milford Hospital, our patients, and the community.”

House Speaker Brendan Sharkey (D-Hamden) was in Milford on Sept. 24 to take a look at state plans for a bathhouse and other improvements to Silver Sands State Park. Pelaccia said he spoke to him before Sharkey could even get out of his car.

“Right away he said, ‘Joe, I understand your problem,’” said Pelaccia, and suggested hospital administrators work with Malloy on the issue. Pelaccia quoted Sharkey as saying that even if the General Assembly had a special session, “‘I do not think it will change anything,’”

Pelaccia said he told Sharkey, “There isn’t anything that Milford Hospital can cut further.’”

Pelaccia said Milford Hospital contributes $168 million to the Milford community.

Slossberg added that she views Milford Hospital as an important community resource, and one that is vital to downtown. She has concerns of how changes to the hospital would negatively affect the city.

Slossberg said she has voted against the hospital tax a number of times due to the concerns that were realized about how the revenue would be spent. In negotiating the current budget, she said she worked with the governor to make sure that hospitals were not harmed, in particular Milford Hospital.

“We fought very, very hard to make sure we had protected funds for the hospital, that we had protected funds for people with mental illnesses,” said Slossberg.

Slossberg said the governor has the authority to reduce line item expenditures by up to 5 percent without calling for a special session of the legislature. She said she supports his authority to reduce the budget in case of revenue shortfalls.

“What I struggle with is the choices that were made at that time,” said Slossberg.

When the reduction was announced Slossberg said she met with the governor’s chief of staff and said, “This cut would be devastating to Milford Hospital.” Following that meeting, she said Malloy announced that five hospitals would have partial funding restored, including Milford Hospital.

“It is no coincidence that Miford Hospital is getting money back,” said Slossberg, commenting that she appreciates that the governor heard the concerns, but said the funding restoration is not enough.

“We are grateful the governor listened,” said Slossberg. “This fight is by no means over and no means done.”

She said Malloy still has the authority to make cuts and could do that if fiscal problems continue.

“We could be doing this dance all over again, depending on what things look like. We need a permanent solution, so we are not constantly worrying,” said Slossberg.

She said legislators have been meeting in small groups to come up with  a “better package” of reductions, but she said she does not expect the legislature to meet in special session.

According to state reports, Milford Hospital has had expenses exceed revenues from 2008 to 2014. In 2014, the hospital had $64.9 million in revenue, but $72.1 million in expenses, resulting in a loss of $7.2 million.

The most recent report entitled “Annual Report on the Financial Status of Connecticut’s Short-Term Acute Care Hospitals for Fiscal Year 2014”, and published by the state Department of Health, Office of Health Care Access, may be read at