Spending Watch


Bulletin #13: June 15, 1999
Hospitals want still more money. How much is enough?

How much could ever be enough money for New York hospitals? Based on the complaints from the hospital lobbyists and unions, there seems to be no answer. After all, New York is already the leader in state spending on hospitals, well ahead of larger states such as California and Texas. As of 1997, the $3.3 billion Albany spent on hospitals represented more than 11 percent of the total for all states. Our population was less than 7 percent of the nation's.

The hospital establishment says those billions of dollars are not enough - and that we certainly can't reduce our sky-high hospital spending, not even just a little. Doing so, they claim, would force massive layoffs of direct-care workers and diminished quality of care. Yet private-sector hospital employment is growing - by 2,800 jobs in the past year. The new growth comes after repeated "the-sky-is-falling" warnings from the hospitals. Meanwhile, more care is being delivered outside institutions, and jobs are growing there, too.

Take the 'devastation' claims with a grain of salt.

The hospital lobby's cry of devastation is getting old - literally, as well as figuratively. For a decade or more, the hospital representatives have been claiming disaster was right around the corner (and, surprisingly, their claims are still credited by some of the state's leading newspapers).

But there's no denying that the bottom line for many hospitals improved significantly during the mid-1990s. Voluntary, proprietary and public hospitals statewide had a net profit of $97 million in 1994, Health Department data show. That figure rose steadily in following years, producing a cumulative total of some $2 billion for the 1994-97 period. The Greater New York Hospital Association says its member hospitals had a total margin of 1.8 percent in 1998, excluding unrealized investment gains and certain capital assets. That figure was down from the previous year, but still represents tens of millions of dollars in profits.

Now, the hospitals are again predicting devastation. They say the solution is not only to reject Governor Pataki's new cost-saving reforms, but to reverse those that the Legislature enacted on a bipartisan basis four years ago. The 1997 and 1998 data show that institutions have done pretty well, thank you, under the existing Medicaid rules. How can anyone seriously argue that we have to go backward now?