Erie County and the medical center that bears its name have struck what appears to be a useful deal that will protect county taxpayers while ensuring that the hospital receives the revenue it is due by law.
The deal struck by County Executive Mark C. Poloncarz with Erie County Medical Center allows the county to spread higher-than-expected payments to the hospital and its nursing home into the future.
The problem, which Poloncarz warned about this summer, is that the county could wind up owing “tens of millions of dollars in unbudgeted health care payments” this year and in the future to subsidize the cost of caring for those without insurance or with too little insurance.
This deal doesn’t save the county money or deprive the hospital of revenue that it is due. Instead, it allows the county to manage payments that may go far above the $16.2 million it budgets each year.
It’s a fair arrangement in which the leaders of ECMC recognize the financial stresses the hospital can cause taxpayers as it goes about its mission. It reflects, in part, the forward-looking management style of ECMC’s chief executive officer, Jody Lomeo, who took the reins of the organization four years ago.
The payments the county makes to ECMC are required by federal law, and for the next three years, county leaders say they could balloon significantly higher. The good news is that when the Affordable Care Act takes full effect – assuming it does – those costs should decline significantly, according to Timothy Callan, the county’s deputy budget director, and could even be eliminated.
The payments are calculated to help fund the “disproportionate share” of low-income patients the hospital serves and for care at its nursing home. They are debited directly from the county with only a few weeks notice, which makes it difficult to budget if the expenses increase dramatically.
If the proposed deal is approved by the County Legislature and a State Supreme Court justice, it would establish a credit system that would allow the county to seek up to $28 million in reimbursements from ECMC for annual hospital payments it makes above $16.2 million. The county would repay that money to ECMC in annual installments of $2 million starting in 2015.
The new system seeks to amend an agreement reached in 2009 by the hospital and then-County Executive Chris Collins that sought to define the county’s obligations to the hospital. It would also deal with two other outstanding issues over workers’ compensation costs and retiree health care expenses.
In the end, said ECMC attorney Anthony J. Colucci III, “What we tried to do is compromise in a fair manner for everyone.” That appears to have been done. The deal requires the due diligence of the County Legislature and the court, but there is no apparent reason at this point for them not to approve it.