NY gets $1.5B to close ailing hospitals

If the threat of closing a single community hospital mobilizes neighborhoods, polarizes physicians and puts local politicians on the hot seat, imagine what the next five years will look like for New York state officials. In a long-negotiated deal, the state of New York has accepted $1.5 billion from the federal government to assist New York in shoring up its ailing hospital industry over the next five years. In return, New York has agreed to close under-utilized hospitals, helping pay off the closing hospitals' debts, fund employee severance and assist with re-purposing hospital real estate. Meanwhile, the state will pump money into high-tech upgrades for remaining viable hospitals.

Since there truly is no free lunch, the funding comes with a tough set of requirements attached. Among other things, not only do officials have to close hospitals--and pay a predictably heavy political price in the communities those hospitals serve--but they also have to put up an additional $1 billion from their own budget to fund these efforts. Even more challenging is the requirement that the state substantially increase the amount it collects from Medicaid fraud prosecutions, rising to amount to $644 million by the fifth year despite the fact that no state had recovered more than $100 million per year prior to last year. A commission created by Gov. Pataki should report by December 1 on which hospitals it believes should shrink or be closed. When they name the doomed facilities, expect to see government-hospital battles that make the original Ali-Frazier bout look like a playground scuffle.

Get more background on the NY hospital initiative:
- read this New York Times report

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