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Nine months into the Illinois budget crisis, hospitals feel the crunch

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Sixteen million dollars. That’s how much the state owes four southern Illinois hospitals, including St. Elizabeth’s in Belleville, according to hospital executive James Dover. He estimates that figure represents 10 to 15 percent of his operating budget over a six month period.

“It’s huge,” said Dover, president and CEO of the Southern Illinois Division of Hospital Sisters Health System, which is headquartered in Springfield. “We’ll never turn away a patient, but what other business would continue to take care of people while the state says ‘Sorry, we’re not going to pay you because we failed to pass a budget?’”

Illinois’ budget impasse has tied up funding for universities, state contractors and grant-funded programs like Meals on Wheels. Healthcare providers for state worker and retiree health plans have not received reimbursements, and some are asking patients for up-front payments. Suits in federal court have wrestled some funding for the state’s Medicaid program, which serves about three million adults and children, but Illinois is spending more than it can take in. The result, hospitals say, is a lag in payments that’s even longer than usual.  

Dover said the hospitals he oversees haven’t been paid by the state in six months. About $9 million of what they’re owed are reimbursements from the state for the care of Medicaid patients. Another $7 million is for the care of state workers and retirees. So far, he said the system has been able to eat the costs without layoffs or putting off planned construction projects, such as St. Elizabeth’s planned move to O’Fallon.

“Here’s the biggest fear. What if they don’t pass a budget? What will happen in terms of Wall Street bond rating agencies and for businesses that we’re hoping that will stay or relocate into Illinois?” Dover asked.

Medicaid repayments take about two months to process under normal circumstances, according to HSHS. The oldest bills held up in the Illinois Department of Healthcare and Family Services are about 10 weeks old, according to spokesperson John Hoffman.

“The total amount due is less than $1 million. Due to the State's cash-flow constraints, this payment schedule is generally typical of Medicaid operations in recent years,” Hoffman said.  

After processing, the payments are then sent to the Illinois Comptroller to be sent out—the oldest bills held up in that office are from the end of December, said press secretary Rich Carter. Add the two together, and you’re up to five months.

The longer those bills go unpaid, the more the state of Illinois will have to pay in interest, Carter said. That’s what is happening throughout the state—a ticker on the comptroller’s website showed a bill backlog of $7.3 billion as of Monday. 

“So far this year, through the first six months of the fiscal year, we had already accrued $190 million in interest on bills we haven’t been able to pay yet,” Carter said. “That’s just interest and late fees that we have to pay to vendors because of the delays in payment.”

At this rate, Carter said, the state will owe $400 million in late fees and interest by the end of the fiscal year.

But even before this year’s budget crisis, many of the state’s roughly 200 hospitals were already having a hard time staying out of the red, said Illinois Health and Hospital Association spokesperson Danny Chun.

“About 40 percent of hospitals all over the state are either losing money or have extremely thin operating margins,” Chun said, citing a figure from IHA’s 2014 Economic Impact Report.

Rural, critical access hospitals and those that care for large numbers of people living in poverty are the hardest hit under the budget impasse, Chun said. Those that are part of larger health systems can pool their savings and distribute funds to smaller hospitals that are less able to weather the storm.

Meanwhile, many community-based services like low-cost clinics, cancer screening programs and domestic violence shelters have scaled back operations without state funding, sending patients elsewhere.

“Hospitals are often the first and last resort for many people to get their care,” Chun said. “If the care is not available in the community… that just puts a strain on the healthcare delivery system in general in terms of maintaining services and access.”

In the St. Louis region, BJC-owned Alton Memorial Hospital is owed “millions” over the past 14 months, a spokesperson for BJC wrote in a statement. Memorial Hospital in Belleville, a 316-bed facility building a second location in nearby Shiloh, declined to comment for this story.

Follow Durrie on Twitter: @durrieB