JPS warns of damaging effects of Texas' budget cuts

State budget proposals would cost Tarrant County's public hospital an estimated $8.5 million in annual Medicaid payments, while possibly steering more patients to the John Peter Smith Hospital emergency room and psychiatric ward, hospital officials say.

Budget drafts call for a 10 percent reduction in payments to Medicaid providers and deep cuts in health and human services spending, including mental-health programs.

The cutbacks would have particular impact at JPS, a safety-net hospital where roughly 25 percent of patients are on Medicaid. It also operates the county's only psychiatric ward. The JPS Health Network's overall budget is $650 million.

CEO Robert Earley said he planned to travel to Austin on Thursday to share the potential consequences with legislators.

"It is going to mean some hits to us," Earley said. "We're not going to run around saying the sky is falling, but we're concerned."

Medicaid, a state-federal insurance program for the poor, covers more than 3 million Texans, including children, pregnant women and people with disabilities.

Proponents of the reductions call them necessary to control spending on the state's Medicaid program, which cost a total of $24.7 billion in fiscal 2011. The federal government picks up $16.6 billion of that.

More than $7 billion a year in Medicaid money is paid to the state's 500 hospitals.

Texas hospitals have protested the reductions, saying they will further strain hospitals' resources and lead more providers to drop Medicaid. The program now covers only about 60 percent of a provider's cost for treating a patient. Less Medicaid coverage would lead more patients to seek help in emergency rooms, where care is far more expensive, hospitals say.

An effort to shift more Medicaid patients into managed-care programs could exacerbate the financial pain for providers, according to the Texas Hospital Association.

"Reductions of this magnitude will seriously jeopardize access to healthcare and shift more healthcare costs to local governments and insured Texans," said Dan Stultz, association president, in a statement.

Earley said that the reductions would probably prevent JPS from expanding services and lead it to re-evaluate existing programs. But characterizing the full effect of the proposed cuts is difficult, he said.

The hospital can't predict how many more people would arrive in the emergency room because their doctors dropped Medicaid or who would wind up in the psychiatric ward because their mental-health services ended, he explained.

"There are a lot of unknowns here," Earley said. "We know what a 10 percent reduction would look like, but I think that is just a surface number. It's hard to figure out all the ramifications of this."

Earley noted that the potential loss of Medicaid payments comes on the heels of JPS' $8 million reduction in property tax revenue.

Officials at other hospitals also expressed concern.

About 60 percent of patients treated at Cook Children's Medical Center are on Medicaid, said Tim Hanners, a senior vice president.

Alex Branch, 817-390-7689