Impact on Sequestration at WMHS

On May 1, the Health Services Cost Review Commission, the group that sets rates for Maryland hospitals, will decide how to handle the Federal Sequestration cuts for Maryland hospitals.  The HSCRC staff recommended that hospitals absorb the 2% cuts and actually the cuts became effective April 1st.  Hospitals have received nominal increases in rates for several years while insurers have enjoyed in some cases double digit increases.  The hospital industry has asked that the 2% be put in rates as has been the case in the past with previous sequestration cuts. The impact of the 2% cut on WMHS for the last quarter of the fiscal year will be $1 million.  The impact on all Maryland hospitals annually will be over $108 million.  This will directly result in the loss of health care jobs and services across Maryland.  At WMHS, if we were to follow the federal government's approach to sequestration, we would immediately and dramatically reduce the hours of patient care, cut back on our trauma and heart programs, reduce cancer services and layoff essential personnel.  Fortunately, we took a proactive approach with our spending in preparation for things like sequestration and the Affordable Care Act last year while preparing this year's budget.  We eliminated over 100 positions and reduced supply costs by several million dollars; in total we reduced spending by almost $8 million.  So, we should not have to impact the organization, our employees or our patients with this cut.  As an aside, we would make every effort not to directly impact employees (although that is becoming more and more challenging) and essential services if we did have to cut expenses in order to absorb sequestration, unlike our Federal Government.  They make cuts based on how much media attention that they can garner and how much blame can be heaped upon whatever political party is in control of the House or Senate.  I will let you know how the decision comes out next week.