Hospitals got hit by a $657 million sucker punch via amendments to the governor’s proposed budget, hospital advocates say.

It didn’t look too bad for hospitals when Gov. Andrew Cuomo released his executive budget Jan. 15, said Jim Clancy, senior vice president, state policy, at the Hospital Association of New York State. Then, the state found out it was facing a $2.3 billion shortfall, and the governor issued 30-day amendments in February to close the gap.

The amendments cut Medicaid payments to hospitals by $618 million in the coming fiscal year, according to the Healthcare Association of New York State. The original budget also includes another $39 million in cuts.

“Cuts of this magnitude jeopardize the continued availability of comprehensive health care services for everyone – not just Medicaid patients – in our region,” said Mohawk Valley Health System President and CEO Darlene Stromstad.

She noted that budget cuts target all health care providers in the state, including emergency medical services, nursing homes and home care.

The cuts come at a time when many hospitals already are struggling — and failing, in many cases — to stay in the black.

“The median margin for hospitals in New York State is just over 1 percent,” Clancy said. “So you start cutting at the rates, that’s going to affect the margin. The hospitals, we have not seen a rate increase in 10 years,” he said.

Medicaid already reimburses hospitals only 73 or 74 cents for every dollar they spend to provide care, Clancy noted.

Here are some of the proposed cuts:

• An across-the-board 0.8 percent cut in Medicaid payments to all health care providers, including hospitals.

• Elimination of a planned 2 percent increase in Medicaid payments to hospitals, which would have been the first rate increase in 10 years.

• Elimination of indigent-care pool funding — which helps hospitals cover losses from caring for uninsured and low-income patients — for hospitals in certain geographic areas that meet certain financial criteria.

• Elimination of the Major Academic Center of Excellence program, which provides funding.

• Lowered reimbursement rates for hospital visits deemed to have been avoidable.

The overall cuts to Medicaid rates are particularly painful because Medicaid bills are paid in half by the state and in half by the federal government. So hospitals end up losing two times what the state saves, Clancy said.

The proposed cuts would cost the Mohawk Valley Health System more than $2.2 million in the coming fiscal year (with another $726,800 hit from cuts in funding to its affiliated nursing home), Stromstad said.

The cuts do not affect the $300 million the state is giving the health system to build a new hospital in downtown Utica.

The health system has been working hard to cut expenses, grow services and bring innovation to the area, Stromstad said.

“Yet, just like other hospitals around the state, we are still challenged by the fact that payments for health care services do not reflect the full cost of providing care. This led to a financial loss off operations last year of $7 million,” she said.

The health system isn’t alone.

“We lost money in 2018,” said Dr. William Streck, president/CEO of the Bassett Healthcare Network. “We were looking to get to break even this year.”

But the cuts would cost Bassett Medical Center $840,000 with a total loss of $1.4 million throughout the system, Streck said. With cuts to the system’s two nursing homes included, the loss would be around $2 million, he said.

“I think what happens is you just don’t do more things that you could do,” he said. “You just have to try to cover the basics; certainly inpatient care is first. The programs that can help people, the recruitment, the expansion of services and all those things are just constrained.”

Stromstad echoed his thoughts.

“Cuts like these often result in what we cannot do,” she said. “We end up delaying investments in equipment and routine upgrades. More importantly, it impacts our ability to keep up with salary increases for our employees, which makes recruiting more difficult and that has an impact on our efficiency and on our patients.”

The proposed cuts are not happening in isolation; hospitals have faced repeated cuts from both the federal and state governments in recent years. “For example, Jan. 1, 2019, and again Jan. 1, 2020, MVHS Medicare reimbursement for our employed physicians will be reduced $1.7 million each year,” Stromstad said.

And more cuts may be coming. Federal cuts to Medicaid Disproportionate Share Payments, which help hospitals with a high ratio of low-income patients, are scheduled to kick in in October. Congress has voted to delay those cuts for years but it’s not certain that will happen again this year.

The cuts could take away 70 percent of the money New York hospitals currently get through the program, Clancy said.

“This is not just a fight till April 1,” he said.

Contact reporter Amy Neff Roth at 315-792-5166 or follow her on Twitter (@OD_Roth).