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Hospitals to receive $373.7M from state

Posted March 17, 2009, at 8:41 p.m.

AUGUSTA, Maine — Jobs will be saved, others created and Maine hospitals will be able to expand some facilities as a result of the state sending the first of two payments that will total $373.7 million for past-due bills owed them by the state.

Gov. John Baldacci signed a financial order Tuesday in the Hall of Flags at the State House to applause from lawmakers and hospital officials that will make $163 million in state and federal funds available within weeks to hospitals as a result of the stimulus package.

“This is a good day,” he said in an interview. “This fulfills a promise made to the hospitals to pay them what is owed and help save jobs and create jobs.”

The financial order was made possible by legislative action in the supplemental budget that ensured the top priority for state funds freed up by increased federal support would be directed toward hospital bills.

“This was a bipartisan agreement and had broad legislative support,” Baldacci said.

While the money used to pay the settlements does not directly come from the stimulus package, the governor said federal officials have said the transparency and accountability rules will also apply to the hospital payments.

“This will be totally transparent,” Baldacci said. “In fact we are going to begin that process right now. We are sending the hospitals a letter with the forms that need to be filled in.”

He said the information will be posted on both the state and national recovery Web sites. Steve Michaud, president of the Maine Hospital Association, said in an interview that he has spoken with hospital administrators and they are ready to comply with the disclosure process.

“We are all for transparency and accountability,” he said.

Michaud said a significant amount of the cash would go to pay off lines of credit that about a third of the hospitals have with banks. He said hospitals were forced to borrow to pay operating expenses when the state did not pay them what was owed in a timely manner.

“This will help reduce health care costs,” Michaud said. “Hospitals will no longer be paying interest on those lines of credit.”

He said “several hundred” positions at hospitals across the state have been cut and he expects many of those will be restored with the cash from the payments. He said with the pressure of the recession, there also will be other jobs that would have been cut that now will be maintained.

“And we know that several hospitals have capital projects that have been deferred because they just didn’t have the resources,” Michaud said. “We will see new projects and programs.”

Baldacci said he had spoken with several hospital administrators who attended the signing ceremony and said he expects some additional wellness programs will be developed with the funding hospitals will receive.

“There was a lot of energy and enthusiasm in that hall about projects that can be undertaken to make hospitals more energy efficient and more efficient in the delivery of services,” he said.

Michaud said that while he does not have specific information on projects any of the hospitals are planning, he does expect a significant amount of construction will occur. He said that will generate construction jobs in addition to the jobs saved or created by the hospitals with the infusion of the cash.

Under the transparency rules, the hospitals will have to explain how every dollar is spent. There will be a listing of jobs saved and jobs created, both at the hospitals and indirectly as the result of any new initiatives that are undertaken.

Baldacci praised the state’s congressional delegation for its work in passing the federal legislation. Sen. Olympia Snowe was a key player in the negotiations over Medicaid matching rates that allowed the state to bring in more federal dollars and provide larger payments to the hospitals.

“When we passed the stimulus package last month, the Medicaid aid to states was a fundamental element,” Snowe said in a statement. “We knew it would provide short-term help to hospitals struggling to keep up with increased demand and long-term support for Americans unable to afford health care services. This crucial funding will keep health care workers employed and rural health care programs from falling through budget cracks.”

The second payment to the hospitals, $210.7 million in state and federal funds will come in budget year 2010 as part of the two-year state budget now under consideration by the Legislature.

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