HAVERHILL — Merrimack Valley Hospital is joining five other Massachusetts health care facilities in threatening a lawsuit to force the state to pay them more money.
Merrimack Valley CEO Michael Collins said his and the other hospitals have one thing in common: At least two-thirds of the patients they serve are covered by Medicare, Medicaid or other governmental, public-payer insurance programs, he said. That means they have large shortfalls from providing medical care to those patients, he said.
"There is a recognition that Medicare and Medicaid do not pay their fair share of costs," Collins said.
So Merrimack Valley and the other hospitals with "disproportionate shares" of patients covered by public payers are stuck with losses.
"This is about fairness and equity," said Collins, whose hospital was owned for decades by the city and then known as Hale Hospital.
In 2001, the city sold the hospital to Essent Healthcare, which runs the hospital now.
Merrimack Valley Hospital's shortfalls from government-insured patients are as follows, according to Collins:
Fiscal year ending Sept. 30, 2007: $2.2 million.
Fiscal year 2008: $1.1 million
Fiscal year 2009: $1 million
Until recently, Collins said, the hospital as a whole has managed to stay in the black by "cutting to the bone." Since he became CEO two and a half years ago, the hospital has had two rounds of staff reductions.
For the fiscal year that ended a month ago, Collins expects a loss of $800,000 at the hospital. That's not nearly as large as the multimillion-dollar losses that regularly plagued Hale Hospital, but it's still troubling, he said.
A similar action by Boston Medical Center Hospital a few months ago prompted the other hospitals to consider filing the lawsuit, said Janice Sullivan, spokeswoman for Quincy Medical Center, one of the potential plaintiffs.
"We are not participating in the lawsuit," said Barbara Keller, director of public affairs for Lawrence General Hospital.
Officials of Caritas Christi, owner of Holy Family Hospital, could not be reached for comment.
For several years, Boston Medical Center has received considerable state help in paying shortfalls from public-payer patients, Sullivan said.
The state's 22 other hospitals with "disproportionate shares" of patients covered by public-payer plans did not receive such aid, she said.
This year, Boston Medical Center was counting on $80 million, but the Patrick administration, faced with a huge state shortfall of money, refused to make the payment, she said.
So Boston Medical Centerfiled a legal challenge against the Executive Office of Health and Human Services. Gary Gibbons, the head of the medical center, reached out to leaders of other hospitals to inquire whether they also needed help with their disproportionate burdens, Collins said.
Collins said, ultimately, the problem will probably require a legislative remedy.
The other health care providers considering the lawsuit against the state, besides Merrimack Valley and Quincy Medical, are Cape Cod Healthcare, Holyoke Medical Center, Berkshire Health System and St. Vincent Hospital in Worcester.
Boston Medical Center has the largest disproportionate share of government-insured patients, 70.8 percent, according to Collins. Holyoke Medical Center is right behind at 70 percent and Merrimack Valley Hospital is at 69 percent, he said.
"We cannot comment on a lawsuit until we have seen it," said Juan Martinez, communications director for the Executive Office of Health and Human Services.
State Rep. Brian Dempsey, D-Haverhill, said providing more help to Merrimack Valley and other hospitals will be extremely difficult given the state's financial challenges.
The sales tax was recently raised from 5 percent to 6.25 percent, so an additional tax increase is not about to happen, he said.
"There are limited dollars we're receiving from the federal government," so the state probably won't provide anymore help, he said.
More than a decade ago, hospitals faced serious financial problems, Dempsey said. The federal government provided more money to ease that crisis, he recalled.
"We've hit another crossroad," Dempsey said of the difficulties. The veteran legislator said if the hospitals and state Legislature work together, they might be able to work out a solution.
"There is no question the Legislature wants to work with them," he said.
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