LUTHERAN TESTIMONY BEFORE THE N.Y.S. ASSEMBLY STANDING COMMITTEE ON HEALTH

LUTHERAN TESTIMONY BEFORE THE N.Y.S. ASSEMBLY STANDING COMMITTEE ON HEALTH

We are here to implore this committee to hear the cries of the institutions most in need, to tell you that there is a relatively simple change to make that will assure equity and stabilization, and one that will assure that the great efforts you have already taken will succeed.

The following testimony was prepared by Wendy Z. Goldstein, president and CEO (at right), and Claudia Caine, EVP/COO and hospital director (far right), Lutheran HealthCare. Presented by Claudia Caine to the N.Y.S. Assembly Standing Committee on Health on February 8, 2013 at Brooklyn's Brooklyn Borough Hall.

We, at Lutheran HealthCare, are grateful for this opportunity to testify today to this esteemed panel. Hurricane Sandy has put an enormous strain on the already frail health care providers in Brooklyn. I want to take one moment to acknowledge the efforts of my colleagues and staff at Lutheran who worked tirelessly, without relief, to absorb the enormous volume of patients – which, at the height of the crisis, doubled the number of patients seeking care in our Level I Trauma Center.

Unfortunately, however, the real storm is still brewing and Brooklyn is directly in its path. And this storm promises to be a doozy. It is the perfect storm because it is a confluence of elements: additional Medicare cuts, Disproportionate Share (DSH) reductions, superimposed on an already fragile set of providers. We have deluded ourselves into thinking that the unplanned closure of hospitals is easily remedied by opening more primary care facilities. We support the expansion of ambulatory, primary care and in fact, Lutheran Family Health Centers is one of the state's largest providers with 65 such sites, but let us not fool ourselves, ambulatory care offers as much protection as an umbrella in a tropical storm. When care requires intensive care units, operating rooms, trauma centers, cardiac surgery, cancer treatment, stroke intervention, hip replacements and on and on and on, we turn to our hospitals. And in Brooklyn, we are at impending risk of finding them submerged. Brooklyn cannot be safe and dry without making sure that there are adequate numbers of hospital and nursing home beds. With several hospitals in, or on the verge of, bankruptcy, this borough faces an imminent and very real risk of not having a safety net to protect us in this storm.

We applaud Assemblyman Gottfried who, through his legislation, demonstrates true understanding of the issue of the fragility of the hospital safety net. He has set forth a definition of that safety net in order to make sure that, as directed by the ACA, charity care dollars go to the hospitals that truly serve the poor. These hospitals, unlike others in the state, rely almost entirely on government payors and therefore have no ability to shift costs from those government payors to private, commercial insurance companies. The assemblyman has taken the first steps to allocate dollars where, and to whom, they were intended. While the intentions of the legislation are critical, we need to make sure that unintended consequences do not occur, and that the outcome of any re-distribution does not harm, but helps, true safety net providers.

We would, therefore, suggest one, additional criteria to further refine this definition: that the safety net providers must demonstrate, not only high proportions of Medicaid but low commercial proportions. We suggest no more than 25% of a hospital's payor mix be commercially insured in order to be eligible for charity care dollars. This change would impact upon a relatively small number of hospitals, statewide, but these are exactly the institutions that need special help to maintain viability. Ignoring this will lead to disaster in Brooklyn and ultimately elsewhere.

Lutheran is often referred to as one of the well-managed hospitals that is not on the brink of collapse. While we certainly appreciate the accolades, the changes taking place as we speak threaten the foundation and the fabric of our essential institution and the care and the jobs it provides. We are being pushed over the edge by the aforementioned effects of health reform and N.Y.S. budget reductions. Between 2009 and 2013, Lutheran Medical Center will have absorbed $44 million in cuts to its income levels ($28 million in Medicaid cuts and $15 million in Medicare cuts). And when a hospital has an operating margin of less than 1%, these cuts serve to completely destabilize it and threaten its continued existence. These combined factors make the temporary closure of just one hospital look insignificant and inconsequential.

We are acutely aware of the very real financial issues that this committee, this state and this federal government face. But, unless you understand the unique issues facing the true safety net hospitals and unless you are willing to take concrete steps to protect them, we will end up in the exact position in which Interfaith, Brookdale, Victory Memorial and LICH have found themselves. To assume that we can sit back and continue to absorb the kinds of cuts being imposed is to pretend that the cancer we cannot see will not kill us. There are no institutions more at risk and more fundamentally important than the safety net hospitals. We are here to implore this committee to hear the cries of the institutions most in need, to tell you that there is a relatively simple change to make that will assure equity and stabilization, and one that will assure that the great efforts you have already taken will succeed.

To insure that safety nets receive their fair share of the indigent care pools we must agree on the true definition of what a safety net hospital is. The state must then "weight" them appropriately and direct DSH funds to those "disproportionate share" institutions.

This is a safety net hospital:
40% or greater Medicaid Discharges (we are at 50%)
25% or less Commercial Discharge (we are at 16%)
2.5% or greater Charity Care Costs (we are at 8%)

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