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Fiscal Emergency Hits St. Raphael’s

by Paul Bass | Feb 11, 2009 12:15 pm

(25) Comments | Commenting has been closed | E-mail the Author

Posted to: Business/Labor/ Economic Development, State

DSCN0725.JPGDavid Benfer is making the rounds at the state Capitol pleading for help with a sudden $35.5 million loss that has forced the hospital he runs to default on $88 million in debt.

St. Raphael Healthcare System is now diving in to a plan to try to plug that $35.5 million gap. It is hustling to please the company that insures its debt, which has the legal right force the hospital to take more cost-cutting and revenue-gaining measures..

The 102 year-old hospital’s emergency plans include closing an ambulatory surgery center, ramping up its physician billing system, negotiating harder with medical suppliers, merging its visiting nursing care with an outside outfit, and reexamining its money-losing mental health services. Through attrition and overtime cuts, it will also trim its 4,200-member workforce, New Haven’s third-largest.

“We don’t want to frighten people. We are a strong employer,” Benfer, the hospital’s president and CEO, said Tuesday afternoon in an interview in his office, seated in front of a painting of the Last Supper. (On the back of his office door hangs a poster for Michael Moore’s film, Sicko.)

“We are not planning any large-scale layoffs,” Benfer stressed. “Our plan is to do it through attrition.”

Most of all, Benfer is appealing to the state to change the way it reimburses Catholic hospitals like St. Raphael’s for caring for poor people under the Medicaid program.

70 Cents On The Dollar

Catholic hospitals in cities tend to get less money than other hospitals. That’s because the reimbursement formula was set in 1982 when many more nuns and priests were working in those hospitals on a volunteer basis. Healthcare and technology costs have skyrocketed since then.

So the state paid Yale-New Haven Hospital (which also loses money serving a large Medicaid population) $1,812 more per patient in the last fiscal year, a 21.8 percent difference, according to Benfer.

St. Raphael’s loses $20 million a year on treating Medicaid patients — 15 percent of the people it sees — because state government pays it only 70 cents on the dollar.

Seeking to help, three New Haven state legislators — State Sen. Toni Harp and State Reps. Toni Walker and Pat Dillon — are pushing a bill to pay the same rates to Catholic hospitals and other hospitals.

“It’s not just St. Raphael’s. All the Catholic hospitals are in desperate trouble. It’s because of the Medicaid rates,” Toni Walker said.

Pat Dillon called on local elected officials to unite in an emergency quest to rescue Benfer’s hospital.

“St Raphael’s employs over 4,000 people, is a good corporate citizen, and some
of its issues stem from flawed government policy,” she said. “If Hartford-area lawmakers rallied [to save] the Bristol Press [newspaper], and Democratic leaders successfully fought for a $23 million bailout of the UConn Health Center last spring, New Haven officials should do the same for our own city. We should all — all — work together to develop a plan for St Raphael’s.”

The proposal, House Bill 5419, would require the state to pay hospitals in the same city the same Medicaid rates. Benfer, who testified on behalf of the bill last week at a hearing before Toni Walker’s Human Services Committee, stressed Wednesday that St. Raphael’s isn’t asking for any money to come at the expense of hospitals like Yale-New Haven.

In his testimony, Benfer cited precedent for parity, including a $57 standard state rate for outpatient clinics at all Connecticut hospitals.

Benfer has made his case face to face with New Haven-area legislators, with the heads of the state budget and social service departments, and, this week, with the lieutenant governor. He said he has received a sympathetic ear.

However new money to raise or modify Medicaid rates was not included in the budget Gov. M. Jodi Rell proposed last week.

And the Department of Social Services (DSS) came out against the proposal at the hearing last week.

In written testimony the department said the bill would boost Medicaid “at least $12.4 million” — in a crisis budget year.

“While the goal of parity in program payment rates is worth discussing, we suggest that any such public policy discussion include a review of rate setting methods for hospital services not only for hospitals located within the same city but for each service type provided by hospitals throughout the state,” the department argued.

For now, DSS spokesman David Dearborn said Wednesday, “in the current fiscal environment, options are extremely limited.”

Ambac At The Door

DSCN0700.JPGMeanwhile, St. Raphael’s is working closely with Ambac Financial Group, the insurer backing two-thirds of the $88 million in debt on which the hospital defaulted last Sept. 30.

The hospital has asked Ambac for a waiver on the debt. Ambac, which is wrestling its own financial crisis, hasn’t given a response yet.

Under terms of the debt, Ambac could decide to overrule the consultants the hospital has hired to undertake its emergency plan to close the $35.5 million gap. It could demand the hospital take more steps to cut costs or bring in more revenue.

“We have a policy. We do not comment on the transactions that we insure,” an Ambac spokeswoman said when asked about the insurer’s plans.

So far, Ambac has responded positively to the dramatic steps the hospital has taken, Benfer reported.

“They don’t want to run a hospital,” he said.

The hospital’s emergency plan has included:

• Trimming its workforce. It currently employs just over 4,200 people, or 3,800 full-time equivalents. Benfer hopes to save $6 million a year through leaving some vacancies unfilled, moving existing employees into other empty slots, and reducing overtime and hours contracted for with agencies.

• Demanding lower prices from vendors of supplies like catheters, gloves, knee and hip replacements. Goal: Up to $7 million in annual savings.

• Boosting revenues by $2 million at its faculty practice plan by improve billing procedures and paying more attention to documentation on charts.

• Partnering with an existing visiting nursing care company rather than continue running its own operation, which lost $1 million last year.

‚Ä¢ Closing an ambulatory surgery center in Hamden. The center made money a decade ago. But it has lost business to surgery rooms opened directly in private physicians’ offices. The hospital is awaiting state approval to close the center, which loses between $600,000 and $1 million a year.

Depending on the state’s response to its Medicaid plea, the hospital will also have to look hard at its behavior health, or mental health, department, Benfer said. St. Raphael’s 10 years ago expanded its children’s behavioral health department to 20 beds, including the only spaces in the state for kids as young as 2; plus a host of outpatient services. It has another 25 beds and menu of outpatient programs for adults. That operation accounts for a full $6.7 million of the $20 million the hospital gets shorted on Medicaid reimbursements every year, Benfer said.

DSS spokesman Dearborn noted that the state did approve, in response to St. Raphael’s pleas, a $600,000 increase over two years in behavior health reimbursements.

How It Happened

DSCN0704.JPGA “perfect storm” produced the unexpected $3t.5 million loss in the fiscal year that ended last Sept. 30 and subsequent fiscal calamities, Benfer said.

Because of the Wall Street crash, the cost of borrowing jumped far higher than predicted — an extra $3 million just for the last three months of 2008. Altogether the hospital has run $6 million in extra borrowing bills.

The hospital had to write down $10 million in assets on two insurance companies it owns. Those companies have half their assets in the stock market.

And an unexpected drop in patient volume (which has since shot back up) contributed to an extra $14.5 million in losses.

Endgame?

Before the Wall Street meltdown, the hospital was pursuing one long-range response to its economic challenges: affiliating with a national or statewide group of Catholic hospitals.

It was in negotiations with Ascension Health, a national not-for-profit chain which owns Bridgeport’s St. Vincent’s Hospital. Ascension was talking with seven potential affiliates. Then Ascension suspended those talks in the fall when it had to confront its own sudden market-driven financial woes.

Long term, such an affiliation could help St. Raphael’s save money on backroom and purchasing efficiencies, Benfer said. For now, the hospital is on its own — with whatever help it can muster from the beleaguered budgeters in Hartford.

“Everyone,” Benfer said, “now is focused on how we weather this current crisis in health care.”

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Comments

posted by: anon on February 11, 2009  12:41pm

This shouldn’t be an issue. The only real solution here is to nationalize the entire health care system of the United States.  Health care costs are crippling our economy.

The real priority should be improving public health, though, which can only be done by raising cigarette and gas taxes even higher, and getting people out of their cars for every single trip.  That would keep people out of the hospitals in the first place.

posted by: Walt on February 11, 2009  12:44pm

Certainly a mess,  which highly -  paid Benfer should have foreseen

When Benfer first took over, he made the move (unsuccessful) to force volunteers to pay for their own -parking as well as todonate their time and labors.

Not unhappy he has his problems,  but paying St.  Raph’s less per patient than places like Yale NH because many years ago nuns staffed the place at minimal cost does not make sense.

Catholic - led hospitals may have to close or sellout soon because of Dem and Obama current attempts to force them into providing abortions or other procedures anathema to Catholic beliefs.

Maybe best to divest them now while they still have value.

posted by: Bill on February 11, 2009  2:52pm

Catholic hospitals and schools don’t get the recognition they deserve. They are told how they should operate (the morning after pill) and not given the same help as secular institutions. When they all close, the tax payers will suffer as a result of this shortsightedness of the democrats and the ACLU.

posted by: norton street on February 11, 2009  4:01pm

anon, that sounds crazy. how am i supposed to get a gallon of milk without driving down a 1/4 down a boulevard. if i walked id be run over by cars going to get their milk.

hmmm…maybe if i got all of my friends to stop driving and they got all their friends to stop, we could all walk everywhere safely.
no no no thats crazy, i bought a giant car, so im going to use it.

posted by: robn on February 11, 2009  7:40pm

BILL and WALT,

Stop propagandizing your religious beliefs. Abortion and the morning after pill have nothiing to do with the hospitals troubles. They’re in trouble for four reasons.

1) Drop in patient volume (nobody’s fault)
2) Anachronism in State funding (blame the State)
3) High borrowing costs (blame Wall St and Banks)4) Bad investments (they should blame themselves)

posted by: anon on February 11, 2009  8:48pm

Norton, as I’m sure you know, driving a quarter mile to get a gallon of milk is going to be impossible in the “new economy” of the next 5 years.  Of course, that’s the way it is already for poor, elderly, children, and disabled residents who are the ones who disproportionately get killed and injured by our society’s careless policies.  But soon, it will be that way for everyone. 

Change the policies to prevent illness in the first place, and we can have a healthier, fairer, more sustainable society, and not have to all spend so much on health care.

It’s okay to have a large vehicle if you can afford it, but that doesn’t entitle people to speed through my neighborhood, killing their neighbors directly and indirectly (e.g., by creating a climate where kids do not feel comfortable playing outside, or where my neighbors don’t feel comfortable walking a few blocks to get their milk).

posted by: SellThem on February 11, 2009  10:13pm

Close the Catholic Hospitals down. Let them all collapse. Apparently the state does not value their contribution nor do many rank and file Catholics (where the hell is Sen Looney on this), so close them. Noboby will care. It is sad, but true.

posted by: fedupwithliberals on February 11, 2009  10:19pm

ANON

“The only real solution here is to nationalize the entire health care system of the United States.”

So, you want to hand over the best healthcare system in the world to a government that has proven itself incapable of managing even something as simple as the analog-to-digital tv conversion box program, now on it’s third year of a rollout? The same government that can’t manage the costs of their own senate cafeteria?? Do you have any idea of what you are asking for? Are you going to accept the rationing of care?? You may be young and naive, but you will eventually get old and sick at some point in your life. Are you prepared to have a faceless bureaucrat, not a doctor, decide what is appropriate medical care for you or your loved ones?

These clowns in the government who are pushing universal health care will never have to use that system for their own needs. They all have gold plated healthcare plans without restrictions. And if that was not enough, they are all millionaires ten times over and can pay to get private medical care ahead of you. Two legs good, four legs bad! Wake up!!

posted by: norton street on February 11, 2009  11:24pm

anon, i completely agree with you. sarcasm is lost in text, i suppose. i dont even own a car, i just wanted to fit in :(

but seriously, folks. the only time you shouldnt be on a bike of your feet is when the weather is harsh, and then you should be on public transportation.

more on topic, i guess i’m lucky i was born at st. raphaels 20 years ago and not today.

posted by: bob on February 11, 2009  11:47pm

There are far too many hospitals in CT: 30 for 3 million of us. Thats about 3 times too many. Too many small hospitals are allowed to survive in an increasingly competitive health care market place because they receive disproportionate amount of hard ship funding from the state and a corropt C.O.N process. The “certificate of need” process in CT, which is regulated by the Govenors office enables small hospitals to continue to provide specialty services (such as cardiac care) that are inferior and yet more expensive than services at Saint Raphs or other large hospitals; Its no wonder we have a failing health care system in CT. The people of New Haven need to understand that if Saint Raphs (the 3rd largest hospital in CT) closes, much in part due to inadequate payment by the state for the large amount of care it provides to medicaid patients, the cost of providing care to these and insured patients will go up 30% or more as they seek their care at Yale which demands a higher payment from both insurers and the state. Access to care will become increasingly difficult for the underserved and the under insured in New Haven County and the quality of care will suffer as well. Mark my words, The financial failure of Saint Raphs will be the first domino to fall that leads to an implosion of CTs health care system as more and more hospitals will be unable to keep up with an increasing burden of caring for underinsured patients.

posted by: Walt on February 12, 2009  6:16am

ROBN

You are probably correct that there are many   reasons for St Raph’s troubles

Added to your list is the stated attempt by the   Dems and Obama to require,  through national legislation,  the elimination of all State abortion restrictions and also requirements that all hospitals offer abortion.

This effort originates with those who favor the so-called women’s right to choose to kill their own babies.

Religion is part of St.Raph’s problem because, whether you like it or not,  St.  Raph’s and many other hospitals   were started, and are owned by the Catholic Church.

If the Dems succeed in their efforts,  the Church,  if it sticks to its long-held beliefs, and if it loses after long court fights, would have little choice but to divest its hospitals

posted by: Rep. Pat Dillon on February 12, 2009  11:56am

“Religion is part of St.Raph’s problem because, whether you like it or not, St. Raph’s and many other hospitals were started, and are owned by the Catholic Church.”
Interesting that so many people see “Catholic” and stop there. It’s a hospital.
Walt, it is true that many Catholic hospitals were founded over a century ago by Catholics - often orders of women religious - in response to the refusal of other hospitals to provide the last sacraments, care to many poor, or even to grant admitting privileges to Catholic physicians.
It is not true that those hospitals are funded by the archdiocese or, by extension, the Vatican. The archdiocese (and the Vatican) do not fund religious orders either. (many orders have closed facilities and sold off land to support aging women religious).
Since the late 1990’s the Vatican, driven by the current pope in his past and present role, has however issued edicts attempting to control the Catholic “brand” and the behavior of Catholic institutions, hospitals and universities.

That has created the impression that they are Church funded even though they are not.

The religious question has been an issue at St Raph’s in the past because the good sisters chose to provide a lot of free care, and did not seize people’s homes for debt. So the financials were perhaps harmed by the sense of mission.
But that was the past. That is not really the problem now, as Robn points out. This is partly a political failure at the state and federal level, and we should fix it.

posted by: Walt on February 12, 2009  12:35pm

Pat Dillon

You quote me and then proceed to rebut a statement re Church funding which I never made.

I said   Raph’s is owned by the Church which I believe it is, probably in the name of the Bishop. 

I believe there is reference to that fact re Church - owned property in the CT General Statutes but I haven’t checked it in many years.

Ownership is not the same as   current operations funding.

Do you dispute something I wrote, or are you objecting only to   what you yourself wrote re funding?

Assuming the problem you     want to fix is the failure of the State to reimburse St.  Raph’s   at the same rate as Yale NH, I would agree.

posted by: robn on February 12, 2009  2:23pm

WALT,

You’re wrong sir. My list, the ubject of this article, includes financial difficulties. If a hospital chooses to close becuase it does not want to offer abortions, that would be the hospitals choice (ironic?), not an external circumstance which drove them out of business.

posted by: Rep. Pat Dillon on February 12, 2009  2:46pm

Glad we agree, Walt. The state does not reimburse them fairly.
Fixing that won’t change what happened in the stock market, but it’s one piece of the problem, and it’s a start.

posted by: Walt on February 13, 2009  10:31am

Congressional   action requiring hospitals to provide abortions as promised by the Dems and Obama is certainly an external factor which can drive St.  Raph’s out of business.

That Robn considers it not relevant is irrelevant to me.


Rep.  Dillon

It was surprising to me to learn that St.  Raph’s gets a lower rate of reimbursement from the State than Yale-NH,  based on info that could be 30 years old

As an ex St.  Raph’s volunteer I recall very few nuns still on the Hospital staff,  even during the reign of Sister Anne Virginie,(nice, competent lady) before Benfer took over.

Has this issue been addressed by the General Assembly in the past?  Is it up for review in the current session?

Seems so ridiculous that it is amazing that such inequity has continued until now.

Thank you.

posted by: Walt on February 13, 2009  2:41pm

Sorry,  stupid questions to Rep.  Dillon withdrawn after re=reading original article where they are answered.

posted by: robn on February 13, 2009  2:56pm

WALT,

Your wrong. If a hospital makes a choice not to remain in business becuase it won’t meet its legal obligations, then the hospital has made a choice….it has not been driven out of business.

posted by: Walt on February 13, 2009  4:29pm

Wrong again ROBN

As in your   post—


Faced with reduced #  of patients, the Hospital has choice of campaign to increase patient load,  reduce expense to reflect lower demand,  and others. 

Not forced out of business

Faced with unfair reimbursement system.  Can choose to fight for equitable treatment as they have done.  Might choose to fight in court

Not forced out of business

Faced with high borrowing costs,.  they may choose to to refinance now at lower rates,raise room fees (already extremely high), get a pork-based gift from the new bail-out plan.

Not forced out of business

ETC>ETC

Your illustrations,  the same as mine can be worked on in many ways.

I gather you are just upset that your usual “women’s choice”  slogan has been printed more fully as “women’s choice to kill their own babies”  which completes the   real meaning of the slogan you apparently prefer.

The Dem effort if successful will present more choices to St.  Raph’s,  and if the Hospital sticks with Catholic values it may choose to close after considering other alternatives.

So when either of us says “forces out of business” we may be misleading.

.

posted by: robn on February 13, 2009  10:09pm

hey WALT,

I noted from the article 4 points financial duress that StRaph’s (where I was born) is facing.

You, on the other hand, made an quixotic argument that “Catholic - led hospitals may have to close or sellout soon because of Dem and Obama current attempts to force them into providing abortions or other procedures anathema to Catholic beliefs.”

Not true dude, and completely irrelevant. Their financial duress and their legal obligations to provide morning after pill are two different things. Stop propagandizing your religious beliefs by nonsensically injecting it into the story of St Raphs budget troubles.

posted by: Walt on February 14, 2009  7:08am

Wrong again ROBN

Re-read my posts and I believe you will find no mention of the morning after pill which you just added to the mix, while implying that I did it.

There is a completely different proposal initiated by Planned Parenthood as I recall and promised support by Dems and Obama during the campaign to require all hospitals to provide abortions.

Not in Congress yet,  .  Hopefully never will be.  I don’t think even Rosa would support it.

If it did pass it would cause serious financial (donations)  problems for St.  Raph’s as well as moral and legal choices including going out of business..

Very relavent to the Hospital’s future.

Please do not twist my words further.

Thank you.

posted by: Walt on February 14, 2009  7:35am

I can’t find source of my claim re mandatory abortions by hospitals, so I may be in error.

Closest to what I said that I see is Obama/Dem support for forcing all insurance companies to cover abortion.

Obviously I must apologize to ROBN for much of what I said, and I do.

My comments re “women’s right to choose tom kill their own babies”  remain

If you see anti-abortion posts under a new name in the future, it may be me,  too embarassed to use my own name.

posted by: Walt on February 14, 2009  2:47pm

—-and please stick the missing “r”  where it belongs

posted by: L on February 20, 2009  11:09pm

like a rat off a sinking ship

posted by: Walt on February 21, 2009  11:13am

Maybe Sr.  Ann Virginie can be enticed to   take over again for a while and earn some $$$$$  for the nuns’  retirement fund.

Here is a suggestion for her.  Check on billing procedures.

Just received a note from my insurance company that St.  Raph’s Shoreline facility is forfeiting a $1,000   fee for a procedure done last Sept,  but just billed.

Too late says the contract between St.  Raph’s and the   insurance co,.( and ,fortunately, per contract, they are also barred from trying to collect the lost fee from me)

Seems cockeyed,  and   further seems that   if they screwed up my billing, it is reasonable to assume there may be many other thousands disappearing because of faulty management,  control and procedures.

Another suggestion.  Check staff relations with volunteers.—-staff getting volunteers to cover staff phones daily so staff can take extra-long coffee breaks?——staff using volunteers as messengers rather than in helping patients?—-losing volunteers because of staff attitudes?

Most important it would seem is continuing to fight for equitable reimbursement from the State as cited originally on this   thread..

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