Hospitals are divided over a proposal to lessen the blow from impending cuts to TennCare by imposing a fee on hospitals.
Jim Brexler, president and CEO of Erlanger hospital, said the proposal might be the best way to keep more hospitals from suffering under deep cuts to reimbursements from the state's Medicaid program.
"I think we should explore every option until we get to that, but ... every hospital in the state will be adversely affected (by TennCare cuts) if we don't put something back in place," he said.
With the money from the proposed fee, state hospitals would be able to draw down federal matching funds, helping alleviate more financial pain.
The Tennessee Hospital Association says hospitals face about $526 million in TennCare cuts in the state budget that goes into effect July 1. The budget includes Gov. Phil Bredesen's latest proposed cuts, announced this week, as well as those previously approved last year.
Hospitals are considering a tax or fee on themselves - up to $200 million - to attract federal matching dollars. The federal government normally contributes $2 for every $1 the state puts into TennCare. During the recession and its aftermath, the match has increased to $3.
Craig Becker, who has been president of the Tennessee Hospital Association for 16 years, said a hospital fee is one of a number of options on the table.
"I don't know if I can sell it to my members, that's the big thing," Mr. Becker said. But "when you think about a $526 million hit to hospitals and you think about the damage it'll do, we have to look at that option."
In Georgia, a similar plan that is part of the proposed fiscal year 2011 budget has been strongly criticized by the Georgia Hospital Association and member hospitals.
Tennessee Hospital Association members are meeting Monday to discuss options and see if they can support raising money through a bed fee or tax or gross receipts tax.
Hospitals that treat a large share of TennCare patients, such as Erlanger, would get a bigger return on their tax payments in the form of more reimbursements from TennCare, Mr. Becker acknowledged. Facilities that treat few TennCare patients would likely lose money under the proposed tax, he said.
Still, Erlanger's Mr. Brexler said some hospitals might be more willing than usual to consider the option because of the dire state of hospitals' finances.
"I think there's more appreciation that ... everybody needs to step up and do whatever part they can," he said. "As services start to close, as access starts to close, everybody will be affected by this."
Jim Hobson, president and CEO at Memorial Hospital, said he hasn't ruled out support for such a tax.
"We're trying to understand it like everyone else is right now," he said Thursday. "I don't know that there is a good solution to the circumstances, but (the hospital fee) may be the best of challenging circumstances."
Officials at Parkridge Medical Center said that, with little detail on the proposal, they couldn't venture an opinion either way, according to spokeswoman Pat Holloway.
LEGISLATORS WEIGH IN
If Tennessee Hospital Association directors can reach consensus on a self-imposed fee or tax to offset $526 million in TennCare cuts, House Speaker Kent Williams says he is willing to consider it.
"If the hospitals want to tax themselves, that's fine with me, especially with the draw down of federal dollars we could get," said Rep. Williams, a Carter County Republican.
Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, was wary of the proposed provider tax, recalling similar taxes in the 1980s and 1990s that federal officials eventually blocked.
"At some point I think as more states probably do it, the feds will eventually close that just as we close tax loopholes," Sen. McNally said. "What happens then? I think as painful as it's going to be it would be better to take the hit now than fall off a bigger cliff later."
The Tennessee Hospital Association looking at other ways than the tax to raise funds. For one, TennCare reserves, totaling about $350 million, should be tapped, Mr. Becker said.
"That's what they're there for, I thought," he said.