A new state fee could mean problems for Ohio hospitals, many of which are already financially struggling. The state calls it a "franchise fee." The hospitals feel it's a tax.
The fee is part of the biennial budget passed in July. The first payment was due on Nov. 30.
"All of these things accumulate, and at some point, either services have to be cut or positions have to be cut," said Howard Rohleder, President and CEO of Salem Community Hospital. "We've made some adjustments at this point, and we'll have to see if it causes more down the road."
Tiffany Himmelreich, of the Ohio Hospital Association, said several hospitals are having to delay necessary modernizations thanks to the fee.
"What that means at the end of the day, patients across Ohio are going to see some impacts in the types of services they can get in their local communities," she said.
State officials said the hospitals will get most of the money back through higher Medicaid reimbursements. However, the Ohio Hospital Association said many rural and smaller hospitals will be hit hard because they have fewer Medicaid patients.
"At Salem we're only going to receive about 40-percent back because of the way that Medicaid pays," said Rohleder. "In our case, that's going to be about $800,000 a year for the two years of the state's budget biennium."
Nearly half of the hospitals in the state have seen layoffs since the country's economic downturn.
The OHA wants to make sure this tax wont be a part of the next state budget.
"Looking forward, what the association is trying to do is demonstrate how bad this tax is on hospitals in Ohio and to keep this from happening again in the future," said Himmelreich.
