Cuts could

hit local

hospitals,

nursing homes

Licensed beds in

nursing homes could

be cut by 15 percent

By KURT NESBITT

Journal Staff Writer

NEW ULM -- Gov. Tim Pawlenty's budget recommendations for nursing homes and hospitals aren't as steep as some local officials were anticipating, but the cuts could run deep if adopted by the Legislature.

As with most areas affected by the state's $4.56 billion shortfall, officials are stressing that the real cuts aren't going to come until the end of the legislative session.

Even so, the governor's budget recommendations have created some worries.

Under the governor's proposal, nursing homes can either take a 4 percent cut in payments or get rid of 15 percent of their licensed beds. An automatic cost-of-living increase of 2.5 percent would be eliminated, as would a $1.8 million nursing scholarship program and several grants.

Pawlenty's plan would also hike nursing home surcharges from $990 per bed monthly to $2,700 per bed monthly.

The plan would end the state law requiring nursing homes to charge equal rates to both private-pay residents and those who use Medicaid. Private-pay rates could rise by as much as 2 percent a year over four years.

Carli Lindemann, administrator of Oak Hills Assisted Living Center and Nursing Home, said any rate cut would have drastic consequences. She estimated that the center -- one of the area's largest -- stands to loose $145,000 a year.

"Seventy-percent of our revenue goes towards wages and benefits," Lindemann said. "We're talking about cutting jobs and we're staffed tight. We don't want to compromise care to our residents."

The governor is also proposing some cuts in state money that will affect hospitals. Pawlenty's recommendations call for a 5 percent reduction in Medical Assistance payments to hospitals.

The governor's plan would eliminate the General Assistance Medical Care program, which provides health insurance for the most needy, and combine it with MinnesotaCare, a similar program that covers single working adults who meet certain income guidelines. It will also roll the state's MinnesotaCare Fund, which uses money from hospitals to fund MinnesotaCare, into the state's general fund.

Lori Wightman, president of New Ulm Medical Center, said she's most concerned about the reduction in Medical Assistance payments because it could cost the medical center $154,000 annually and do $5 million worth of damage to Allina, the hospital's parent company.

Wightman said she also sees some issues with the consolidation of GAMC with MinnesotaCare because of reduced eligibility requirements and increased premiums. She said that combination could lead to more uninsured people who need health care.

Rolling the MinnesotaCare Fund into the state's general coffers is also cause for concern because "money for MinnesotaCare could go for roads, kind of like the tobacco fund," Wightman said.