Horizon, Host: Ted Simons

April 22, 2008

Host: Ted Simons

Healthcare and the State Budget

  • How will balancing the state budget affect agencies such as AHCCCS and payments to hospitals and healthcare programs? John Rivers, president and CEO of the Arizona Hospital and Healthcare Association, joins us to talk about the cost of providing healthcare in a lean economy.
  • John Rivers - President and CEO,Arizona Hospital and Healthcare Association
Category: Medical/Health

View Transcript
Ted Simons:
Many state agencies and programs are facing funding cuts in order to balance the state's budget. Some say those cuts could have a wide-ranging impact in the area of healthcare. State lawmakers have reduced payments from Access to hospitals as well as made cuts to the state's graduate medical education program. Joining me now to talk about the effects of some of those budget cuts is John Rivers, President and C.E.O. of the Arizona Hospital And Healthcare Association. Good having you here.

John Rivers:
Thank you.

Ted Simons:
The '08 budget, how much does it affect healthcare?

John Rivers:
To the tune of $4.5 million totally. About 1.5 million of that is state funding for graduate medical education as you referred to it or GME. State dollars for state Medicaid programs Access is matched with federal dollars. There's a compounding affect when you increase spending on Access. One additional dollar spent is two additional federal dollars that come into state. But budget cuts in state funding means two dollar reduction in federal fund. So total it's a $4.5 million reduction for GME.

Ted Simons:
How much does access cover in terms of hospital costs?

John Rivers:
About 88\% of total costs. Under plans underway for the 2009 budget that number could drop further. Which means in today's dollars if it cost $1,000 to take care of patient in one of the hospitals, we will be paid $888 from Access. We're being paid below cost on just about every patient.

Ted Simons:
It's worst in rural areas?

John Rivers:
It was worst until the legislature adopted a save pool which is a special pool to help our small rural hospitals. That's the money they appropriated every year for three or four years now. That has brought up rural hospital up to parity pretty much up with our urban hospitals in terms of payment.

Ted Simons:
Is SAVE saved?

John Rivers:
We don't know yet. SAVE was not touched in the 08 budget. It's on the chopping block in 2009 and several other programs in aggregate total $86 trillion.

Ted Simons:
What are the consequences of these cuts?

John Rivers:
Depends on the program. For example the GME cuts that were just approved by the state legislature, again 1.5 million in state money, 4.5 million total. Next year we'll produce--we'll have 48 fewer residency slots available in our Arizona hospitals. Remember, residency programs are where physicians go after they completed their formal medical education, after they have completed their internship program and going in areas of specialty whether it's surgery or cardiology or whatever it happens to be. With fewer GME slots, we'll have fewer doctors in Arizona. That's what it means over the years ahead. We're the state right now that ranks near the bottom of the list among all of the states for the number of doctors that we have per 100,000 population. That problem will now get worst.

Ted Simons:
How will hospitals react to this? I am a reaction is necessary. The '08 budget is in and the '09 budget is working on. Something is going to happen here. How will they react.

John Rivers:
I think the they will react is we will simply not be funding or picking up the slack for the residency positions that the state was paying for that now they're not going to be paying for. Those residency position also disappear. That means fewer doctors in the future. Now what happens, how we'll react to the 2009 budget depends on what decisions they make. If they make decision that is reduce payments further to hospitals, it means that we'll get further behind to answer your question directly. What are we going to do? Our ability to recruit doctors and nurses will be less than what it was before. It means our ability to reduce emergency room wait times will be severely impaired. It means our ability to expand our capacity to meet the needs of growing community will also be impaired. Fewer resources mean less capacity on our part to do the things that we need to do.

Ted Simons:
I know there's a talk of a hidden tax in this as well.

John Rivers:
It is a hidden tax. Somehow the costs have to be paid for by somebody. Unfortunately, our healthcare system involves robbing Peter to pay Paul. Much of the burden will be shifted over to commercial insurance companies who will increase premiums on people like yourselves who have to pay more.

Ted Simons:
Last question, critics say it's wrong but it's a done deal. Time for new plan, new idea. Any plans for new ideas in works?

John Rivers:
I don't know any other way to fund graduate education than the way it's done right now. It's a fair question that should there be a new model for funding? But the model we have is what we have got. It's fair to rethink that. I think for the time being we have to live with the decision which means fewer doctors in Arizona in the future.

Ted Simons:
Thank you for joining us.

John Rivers:
You're welcome.

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