Hospital administrators in the District are warning of layoffs if city officials approve a surcharge on hospital stays that is being proposed by Mayor Anthony A. Williams.
“We would definitely have to look down that road,” said Richard L. Davis, chief financial officer for George Washington University Hospital. “We feel like the proposal is an unnecessary and unwarranted attack on an industry that is probably an easy target.”
Mr. Williams has proposed taxing hospital and nursing-home stays as part of his $6.2 billion budget pending before the D.C. Council.
In a March 29 letter to the council, Mr. Williams said the provider tax would generate about $18 million in revenue.
“Like 37 other states, the District would institute a tax that will generate revenue to support expanded services in elder care, treatment of the medically disabled and general health services,” Mr. Williams said.
The D.C. Hospital Association, a trade group, said yesterday the 1.2 percent tax would cost city hospitals about $25 million.
“The hospitals are adamant in the view that this would be a terrible thing,” said Robert Malson, director of the D.C. Hospital Association. “Greater Southeast Community Hospital is just coming out of bankruptcy, and we don’t want them to go back into a situation where they can’t provide services in that part of the city.”
Greater Southeast, the only hospital on the east side of the Anacostia River, emerged from bankruptcy two weeks ago. But the facility has lost more than $2 million in February, according to court records.
“The provider tax would create an inability to turn a profit,” Greater Southeast Administrator Joan Phillips testified in a council hearing last week.
“The impact, along with service and staff reduction, will be the inability to purchase equipment and open new services as planned.”
Tony Bullock, spokesman for Mr. Williams, said yesterday the tax should not result in layoffs.
“We expect that they would pass on the costs associated with the tax and that it would be absorbed by the private insurance plans,” he said.
Mr. Bullock said Medicaid and the city-funded D.C. Healthcare Alliance combine to provide health insurance coverage to all but about 9 percent of city residents.
“That is an extremely low rate, but it can’t be a one-way street of D.C. government money funding these initiatives,” he said. “We’re trying to keep our system going, and we’re asking hospitals to do what hospitals in other states are doing … But we didn’t expect the hospitals to like this, we know this is a difficult thing.”
Mr. Bullock said city officials proposed the provider tax rather than cutting individuals from Medicaid.
“At that point, the hospitals would have had an increase in their uncompensated care that would be considerably more than the tax they’re being asked to pay,” he said.
However, D.C. hospital administrators say facilities would not be able to absorb the extra tax. They say city hospitals continue to lose money because of the increased patient load after the city closed D.C. General Hospital in 2001.
“The impact would be grave,” Lisa Wyatt, vice president of public affairs for Washington Hospital Center and MedStar Health, said of the proposal.
“Last year, we lost $14.5 million and we had to layoff 190 employees, and we had to layoff 196 employees the year before,” she said. “If we have to take another hit, we’re going to have to layoff more personnel.”
Dr. M. Joy Drass, president of Georgetown University Hospital, called the proposed tax “devastating” in council testimony last week.
“District hospitals cannot afford this additional burden; for some, it may be the last straw,” Dr. Drass said.
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