BOSTON — The head of the Merrimack Valley's largest healthcare providers is calling for more support for safety net hospitals that serve large numbers of low-income patients, many of which are struggling as a result of the pandemic.

Lawrence General Hospital President and CEO Deborah Wilson says her hospital's financial situation was precarious even before the pandemic but has reached a crisis level amid disparities in state funding and the cost of treating thousands of COVID-19 patients.

"It's a very serious situation," she said. "We simply can't cut our way out of this, and if we don't get help we're going to lose critical services for the community."

Lawrence General is among a small group of hospitals that have been labeled "double disadvantaged" because of low MassHealth reimbursement rates and the relatively large portion of revenue tied to Medicaid funding. Others include Boston Medical Center and Carney Hospital in Boston's Dorchester neighborhood.

Another financial pressure on safety net hospitals is the long-running issue of price variation — with commercial insurers paying some hospitals far more than others for providing the same services.

But the pandemic has worsened the hospital's financial standing. Lawrence was hit hard by the COVID-19 outbreak and the hospital treated disproportionately large numbers of ailing patients.

Lawrence General reported a $13 million loss last year even after getting federal aid in the CARES Act and state aid through supplemental MassHealth funding.This year the hospital's finances look even more bleak, with losses projected at $20 million.

The anticipated deficit has forced the hospital to trim $6 million from its operating budget and lay off more than 50 workers.

Reimbursement disparities

The concerns about the financial stability of safety net hospitals has prompted lawmakers to call for more funding and law changes to help them survive.

Sen. Barry Finegold, D-Andover, has pushed for changes that would allow for higher MassHealth reimbursements and commercial insurance rates for safety net hospitals. He also wants the state to provide those hospitals with a short-term cash injection, with billions of dollars in federal aid headed to the state.

In a speech before the Senate last week, Finegold gave an impassioned plea for additional state funding to Lawrence General and other safety net hospitals.

"We need to implement long-term structural reforms to hospital reimbursement rates and provide immediate short-term funding to help LGH and other community hospitals survive the impact of the pandemic," he said. "If we don’t, LGH will be forced to shut down services and close down the very same beds that had COVID patients in them. This is not a false alarm."

Finegold said the wild price variations in health care wouldn't be tolerated in any other industry. He pointed to data showing that Lawrence General gets $260 for performing a mammography, while Nantucket Hospital gets more than $700.

"Is someone in Nantucket worth two and half times more than someone in Lawrence?" Finegold asked. "Imagine if a bank gave out a loan to someone in Lawrence at 10% and someone in Nantucket at 4%, even if they had the same credit. Why do we allow these inequities to persist in the insurance industry?"

Race and care

Finegold says the issue has a racial dynamic, with safety net and community hospitals serving predominantly communities of color.

The state’s safety net hospitals and community health centers — which include Salem Hospital, Holy Family Hospital in Methuen and Anna Jaques Hospital in Newburyport — serve a disproportionate percentage of low-income patients.

Many are heavily dependent on federal Medicaid reimbursements, which are typically less than traditional commercial insurance payouts.

Nearly 30% of Lawrence General's gross revenue is for care provided to Medicaid patients. The state average is 18%.

Health care coverage, in the meantime, is one of the state's biggest expenses.

Medicaid costs have doubled in the past decade and now account for nearly 40% of state spending.

MassHealth serves more than 1.9 million people — more than one-fifth of the state’s population.

Complicating the push for additional funding to buoy safety net hospitals is a brewing spat between Gov. Charlie Baker and legislative leaders over distribution of $5.3 billion in federal pandemic relief money that's headed for the state.

Senate President Karen Spilka, D-Ashland, and House Speaker Ron Mariano, D-Quincy, announced earlier this week the Legislature will create a "segregated" fund for the relief money. But the Baker administration argues that move isn't necessary and will create red tape as the state tries to distribute the money.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com

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