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What's Happening at Boston Medical Center and Cambridge Health Alliance?

There are critical meetings underway this week at Boston Medical Center (BMC) and Cambridge Health Alliance (CHA) as the two hospital networks look for ways to make deep cuts. Roughly 16% of the state budget reductions Governor Patrick announced last month apply to these institutions. * At CHA, the 55 million is about 15% of the network's operating budget.** BMC now anticipates $114 mil in cuts this year, which President Elaine Ullian explains here. That's about 12.5% of BMC's operating budget (was $900 mil last year). Both hospital networks are worried there will be more cuts in state funding this year than those announced to date.

The administration says cuts to the two safety net hospitals and their health centers are not final, but that it does not plan the additional losses BMC says it has been told to expect. Secretary JudyAnn Bigby says that her priority as she combed the health care budget was to keep enrollment in the state's free and subsidized insurance programs open. She adds that she had been looking for more than a year for ways to improve payments to community hospitals. These cuts may appease community hospitals that have been complaining for years that additional payments to BMC and CHA are not fair.

Cambridge Health Alliance is believed to be in a more dire financial situation than Boston Medical Center.

CHA says part of the problem is that state health coverage payments favor the main Boston hospitals as the expense of Cambridge and other hospitals that focus on primary care and behavioral health. CHA is working with Ernest and Young on a financial turn around plan that would might include layoffs, the closing of health centers or one of the network's hospitals. Separately, Secretary Bigby has asked some hospital consultants to review options for CHA. Boston Medical Center has not said where or how it would cut programs, services or staff to adjust to less state funding.

Both of these hospital systems have been warned that the additional state and federal money they received to help them transition from direct payments to care for the uninsured...to an insurance program for the uninsured would end after this fiscal year. But if they aren't ready...does the state need to make adjustments to protect patients? Or is it time for these hospitals to get used to having less money.

* Cambridge says intial cut was $55 mil (which includes reduced safety net hospital payments, lower Medicaid reimbursement and declining managed care rates. BMC's total was $94 mil (which included a $64 mil the hospital expected to receive for the last fiscal year and lower Medicaid reimbursement rates). $149 is 16% of the roughly $900 mil in cuts the Governor announced.

**Hospital officials say the operating budget is close to half a billion. The 55 mil will trigger deeper cuts because CHA is already a third of the way through its fiscal year.

Martha Bebinger

This program aired on November 5, 2008. The audio for this program is not available.

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