Water from a stone: Gov’s budget squeezes Sharon Hospital

SHARON — Gov. Dannel P. Malloy’s multi-year spending plan would have a devastating effect on Sharon Hospital if it is approved, and could change the range the services the hospital currently provides, according to hospital administrators.

At a press conference at the hospital March 7, Chief Financial Officer Mark Reyngoudt said the hospital has made about $1.5 to $2 million a year over the past couple years after taxes  in profits. 

The governor’s budget plan would essentially hit the hospital with $2.2 million in unreimbursed taxes and fees.

Reyngoudt said, “$2.2 million is unsustainable for us. It’s a significant burden for us and for other hospitals that can not be overcome.

“If we make $1.5 to $2 million and have to pay $2.2 million, that money is just not here. We have already made significant cuts and I dont know where more cuts can be made without severely impacting the hospital’s operations.”

Speak out now

The purpose of the conference was to alert the public to the dangers posed by the spending plan, and to ask constituents in the area to contact their legislators at the state and federal levels. 

Malloy’s proposed spending plan is now before the state Appropriations Committee. The budget will be finalized by April. 

As with all government spending plans, Reyngoudt noted that it is always easier to make changes before a budget is finalized and approved.

Also at the conference were the hospital’s president and chief executive officer, Kimberly Lumia; Ben Heller, who is chairman of the hospital’s board of governors; Janet Nickson, who is chairman of the hospital Advisory Board; Associate Administrator Kathy Berlinghoff; and Jill Musselman, who is business development and communications officer.

Sharon Hospital’s profits are reinvested in capital improvements such as maintaining the building and in buying new equipment, Reyngoudt said.

“Health care is a very capital-intensive business,” he said.

The problem facing the hospital is not necessarily that it must pay $2.2 million; the problem, Reyngoudt said, is that  none of the money will be funneled back into the hospital by the state.

Previously, Sharon Hospital got back about $1.7 million of the $2.2 million it paid to the state, thanks to federal matching funds.

Under the governor’s spending plan, those funds would no longer be returned to Sharon Hospital. The plan cuts reimbursements to Sharon down to $1.3 million this year and to $900,000 next year. Eventually, the reimbursement would be eliminated completely. 

The elimination of the refunds will impact most of the hospitals in the state. Some of that money (about $350 million) will go back into the state’s general fund. Heller said he believes the portion of that money that must be dedicated to health care could go to the University of Connecticut Health Care Center in Farmington. 

“Wherever it ends up going,” Reyngoudt said, “one thing is clear: It isn’t coming back here.”

Impact of Obamacare

In an email regarding the hospital and the budget concerns, state Rep. Roberta Willis (D-64)  explained that the governor is justifying “these cuts by presuming that hospitals will enjoy a ‘windfall’ when the uninsured and under-insured are able to buy insurance through the exchanges or receive Medicaid under the Affordable Healthcare Act.”

Willis explained the history of the reimbursement system by saying that, “Two years ago, the state instituted a user fee on hospitals aimed at bringing more federal money to the state.

“By taxing hospitals, then redistributing the money back to hospitals, the state was able to capture federal matching funds and then pay out the proceeds to the hospitals by way of a distribution formula based on the number of uninsured and Medicaid patients.

“Sharon Hospital was an outlier and  unlike the other hospitals  lost funding because of the relatively small Medicaid population and also because many of their Medicaid patients are from New York and not reimbursable by Connecticut.”

First for-profit in state

Heller, a Sharon resident, was instrumental 12 years ago in helping the hospital convert from a nonprofit to the first for-profit hospital in the state. It remains the only for-profit hospital in Connecticut. 

The company that first took over the hospital was Essent Healthcare, of Nashville, Tenn. Recently, Essent merged with RegionalCare Hospital Partners, also in Nashville. 

At the time of Sharon Hospital’s conversion (which was completed in 2002), Essent was chosen in part because the company promised to keep Sharon a full-service hospital. 

It is the smallest hospital in the state, with 78 beds. Substantial upgrades have been made in recent years, including the expansion of maternity and wound-care services.

“We’ve invested $37 million in capital and programs over the last 12 years,” Heller said. 

Lumia said that the hospital must continue to provide emergency room, cardiac and obstetrics services. But if the governor’s budget succeeds, the hospital might have to shut down outpatient chemotherapy, pain management, wound care and more. 

“We’re looking at every single thing.”

She said there is also “a perception that CEO salaries are high. I’m the lowest paid in the state. I get $257,000 a year.”

Reyngoudt said he is paid $195,000 a year, and he is  the lowest-paid hospital CFO in the state. 

Neither has been paid a bonus in recent years because the hospital has not met its budget.

The hospital has 285 full-time equivalent employees and a total of 401 workers. It has paid property taxes to the town of Sharon since the conversion in 2002. This year, its property was assessed for the Sharon grand list at $19,999,900. It is the top taxpayer in the town. 

Second on the list is the Weatherstone estate, which was assessed at $10,124,330.

Although Lumia said she feels that the budget plan will be changed to lessen the hit on the hospitals, it is still essential to reach out to legislators and express concern. 

“We’re fighting. Very hard,” Heller said. 

For information on how to contact your state and federal legislators, click here to view The Lakeville Journal Co.'s Towns and Villages special publication.

This article has been updated to reflect the presence at the meeting of Sharon Hospital Advisory Board chairman Janet Nickson.