Georgia hospitals got leveled by the equivalent of a gubernatorial body slam last week when Gov. Sonny Perdue revealed new plans to reduce the state's budget by $443 million to offset projected revenue declines for fiscal year 2011, which begins this July 1.
Perdue seeks to slash Medicaid payments to hospitals and other healthcare providers by 10.25 percent. In addition, the governor wants to eliminate the state sales tax exemption for nonprofit hospitals--a move that mirrors a growing national trend to revoke nonprofit tax breaks. The state's hospitals would lose about $144 million from the Medicaid cuts, as well as an additional $130 million from the elimination of the sales tax exemption.
Hospitals brought these steep cuts on themselves, according to Perdue, by their steep opposition to his earlier plan to institute a 1.6 percent hospital tax. Thanks to a higher federal draw-down, Medicaid reimbursements would have actually gone up by 14.5 percent under the "bed tax" proposal, he says, charging that hospitals haven't "been fair with the citizens of Georgia."
Hospitals rallied against the proposed bed tax because current law would have allowed the fee to be raised as high as 5.5 percent in the future, says Earl Rogers, a lobbyist for the Georgia Hospital Association. Perdue's new proposal to cut Medicaid payments by double digits could compromise patient care and even force hospital closures, he warns. "Grady (Memorial Hospital) closes under a scenario like that."