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Budget cuts hit hospitals
Latest plans could mean $8.5 million less for Gainesville system
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Gov. Sonny Perdue’s proposal to cut state funds by more than 10 percent for hospitals serving Medicaid patients could cost Northeast Georgia Health System more than $5 million, according to a source with the hospital.

Furthermore, Deb Bailey, director of government affairs for the health system, said another proposal by Perdue requiring nonprofit hospitals to pay sales taxes for purchases would cost the hospital an additional $3.5 million.

The proposals were made Thursday to deal with a gaping budget shortfall. If approved, they would impact the way Northeast Georgia Health Systems does business, Bailey said.

“I think that we are a very efficient health care system, but I think that cuts of this magnitude would have to impact — it wouldn’t impact how we serve the Medicaid population — but it would have to impact how we do business in some ways,” Bailey said. “Whether it affects jobs or purchase of new equipment — you couldn’t sustain a cut like that without it having an impact.”

Perdue’s Medicaid proposal adds to about $15.6 million Northeast Georgia Health Systems lost last year for Medicaid patients, Bailey said. Currently, the system is repaid about 82 percent of the cost of providing service to those patients, she said.

“A cut would take us to over $20 million that we would lose on  treating just Medicaid patients,” Bailey said.

Earl Rogers, a lobbyist for the Georgia Hospital Association, said the cuts would harm patient care by leading to the layoffs of doctors and nurses.

“You go to a hospital where a nurse is in charge of taking care of eight patients and suddenly, because of job layoffs, she’s in charge of 12 or more patients, then you’re talking about potential life-and-death circumstances,” Rogers said.

Others said the governor’s plan would be devastating to the state’s cash-strapped rural hospitals.

Bailey, like other hospital officials in the state, is pushing for state officials to hike the state’s cigarette tax by $1 a pack, which they say would raise about $342 million.  Bailey said a conservative estimate is more like $350 million, and that Georgia has one of the lowest cigarette taxes in the nation.

Increasing the tax to $1 puts Georgia on par with the rest of the nation, which charges an average of $1.34 in taxes per pack, Bailey said.

“We think that there’s some better options out there,” she said.

But Republican leaders, some of whom have pledged to balance the budget without raising taxes, have been cool to the proposal, calling the revenue unreliable.

Perdue initially proposed a 1.6 percent tax on hospital revenues. But hospitals and state legislative leaders panned the proposal, though some hospitals who serve a large number of poor Medicaid patients would have benefited from part of the plan that would have boosted Medicaid provider fees.

“Frankly, I don’t think the hospital community has been fair to the citizens of Georgia,” Perdue said.

At a news conference Perdue said the state is undergoing “a government reset.”

“We’re taking a step back from a lot of things that were nice to do in good times,” he said.

The bad budget news has been expected since February’s revenue numbers dipped for the 15th straight month. Perdue on Thursday lowered the revenue estimate for the fiscal year that begins in July by $443 million, effectively giving legislators fewer dollars to spend. The budget will drop from $18.2 billion to $17.7 billion.

The new cuts rippled throughout state government. Many state agencies that have already endured round after round of reductions will be asked to slash another 3 percent from their spending. There are a few exceptions, such as elementary and secondary schools and the department of corrections, which won’t be cut as much.

But hospitals, that had been protected so far from Medicaid cuts, were hit hard in Perdue’s new budget blueprint.

Hospital officials immediately warned that health care facilities around the state — including Atlanta’s Grady Memorial Hospital — could be forced to close if the governor’s proposals are enacted.

With state tax collections in free-fall, Perdue is also pushing to cancel the state’s weeklong back-to-school sales tax holiday. Georgians also will face a host of new or increased fees totaling some $96 million as the state scrambles to balance its books.

Lt. Gov. Casey Cagle said Thursday there is a consensus on about 90 percent of what the governor released.

“The good news is we’re working together,” Cagle said.

The Associated Press contributed to this report.

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