State hospitals group lobbies legislature over tax burden

HARTFORD >> Connecticut hospital executives and caregivers made what seems to have become an annual pilgrimage to the state Capitol Wednesday to oppose the state’s proposed reimbursement structure and a potential new property tax on state hospitals.

In the process they made friends with lawmakers and butted heads with Democratic Gov. Dannel P. Malloy’s administration, which has been feuding with the organization since it created what’s being called the “provider tax.”

At a Wednesday morning press conference, hospital executives who were surrounded by lawmakers, said Malloy’s budget proposal was “shameful.”

Bristol Hospital President and CEO Kurt Barwis said it’s not like hospitals are making money hand over fist.

“It’s just a very shameful thing to take money away from a nonprofit organization,” Barwis said.

The Malloy administration says the provisions of the provider tax structure is dictated by the federal government and the hospitals are exaggerating their fiscal condition in order to get their hands on more public money.

“The hospitals would have you believe they alone are shouldering a tremendous burden on behalf of the state’s residents in order to address the state’s fiscal difficulties, and are subject to taxes so onerous that they can barely stay in business,” Chris McClure, a spokesman for Malloy, said.

Under the provider tax hospitals this year will pay about $556 million to the state, and only receive about $160 million back.

However, McClure argued that even after these taxes hospitals reported $870 million in revenues over expenses in 2016, which is more than double the amount they reported in 2015.

Dr. John Murphy, president and CEO of the Western Connecticut Health Network, said hospitals have watched their funding get slashed. He said the state’s taxing scheme threatens hospitals’ ability to carry out their mission of serving communities.

Adding insult to injury for the hospitals, Malloy proposed giving municipalities the ability to levy property taxes on nonprofit hospitals.

Murphy said the benefit of not paying property taxes was bestowed upon hospitals for the past 125 years in exchange for the socially beneficial work they do.

“A responsible state government should acknowledge and embrace this complex reality,” Murphy said.

But McClure said under Malloy’s budget proposal hospitals would see their funding increased as a result of the change to property taxes.

The governor would allow municipalities to tax hospitals, potentially raising up to $208.2 million for struggling municipalities. The state would then return $250.3 million in supplemental payments to hospitals.

That’s $42.1 million more for hospitals.

However, hospitals are still wary of any proposal by the state to redistribute the money.

“Experience causes us to question whether those funds would be sent to hos- pitals,” Connecticut Hospital Association CEO Jennifer Jackson said.

She said the organization is also concerned about what’s happening in Washington and wonders whether the reimbursements will be there for the Medicaid population.

“We don’t know whether we can count on those funds,” Jackson said.

Jackson said they are willing to continue to have conversations with the Malloy administration.

House Speaker Joe Aresimowicz, D-Berlin, said Connecticut can’t just go to the hospitals every time there’s a money shortage and figure out a way to take money from them.