As reported by The Hartford Courant, February 22, 2007.

Official: Health Center Needs Extra Funding

Dempsey Hospital Can No Longer Subsidize UConn Schools, He Says

By Colin Poitras

For the past four years, revenue from the John Dempsey Hospital has helped bail out the sagging finances of the University of Connecticut Health Center's three medical schools.

But the health center's president told lawmakers Wednesday that the hospital can no longer carry the burden and he anticipates the health center will need an additional $55.2 million over the next 21/2 years to break even.

"This shortfall cannot be addressed by cuts," Dr. Peter J. Deckers told members of the legislature's appropriations committee during a hearing on the health center's budget. "Personnel reductions of this magnitude will only increase our losses."

Deckers said the health center has already achieved $74 million in cost reductions and increased revenue over the past six years, but that hasn't been enough to offset rising academic-related costs that will leave the health center with an estimated $21 million deficit at the end of the current fiscal year, June 30.

Without additional financial aid, Deckers estimated he will need an additional $34.2 million over the next two fiscal years to cover health center costs.

Gov. M. Jodi Rell in her biennial budget plan proposed giving the health center $80.6 million in fiscal 2008 and $81.9 million in fiscal 2009. Deckers said Wednesday he needs $93.5 million in 2008 and $103.2 million in 2009. Combined with the approximately $21 million needed to balance the books in the current fiscal year, the total amount of new money Deckers anticipates he will need is $55.2 million.

That money would be separate from the approximately $495 million UConn officials are seeking to build a new 352-bed hospital in front of the health center. Deckers said expanding the bed capacity of John Dempsey Hospital through the creation of a new hospital, while not part of Wednesday's request, remains a key element to the health center's long-term success.

"There is no way to even cover our fixed costs ... without new beds," Deckers said. "At this size, we can't cut any more. ... We must effectively expand if we are going to remain competitive."

John Dempsey Hospital, located in Farmington, has 224 beds.

John Dempsey Hospital is facing its own fiscal troubles in today's competitive health care market, Deckers said. The hospital, which has contributed $19.3 million to the health center since 2002, is grappling with lower Medicaid reimbursements, Medicare cutbacks and increases in uncompensated care, as are many other hospitals, he said.

But unlike privately run hospitals, John Dempsey also must underwrite unprofitable health services for state prison inmates, state psychiatric patients, and clients of the Department of Mental Retardation, Deckers said.

In addition, the hospital receives no state money to help cover fringe benefits for its clinical employees, which this year are costing $10.5 million more than for hospitals of similar size, he said.

State Rep. Andrew M. Fleischmann, D-West Hartford, was cautious about endorsing a new hospital to help balance costs. He said the larger hospital may just exacerbate existing issues, such as the fringe benefit problem.

"I'd be interested in seeing how expanding the hospital gets us out of that bind," Fleischmann said. "With a larger hospital, we could have an even larger financial issue."