Brownback Budget Plan Cuts Nearly $20M From State Psychiatric Hospitals

Feb 3, 2017

Kansas’ two state-run psychiatric hospitals would lose nearly $20 million under the budget proposed by Gov. Sam Brownback.

In the current fiscal year, Osawatomie and Larned state hospitals are relying on state funds to make up for the loss of federal funding. Brownback’s recommendations for the fiscal year that starts in July would end that practice, leaving it to the hospitals to make up the lost revenue.

The governor’s proposal would cut Osawatomie State Hospital’s annual budget by $11.6 million and Larned State Hospital’s by about $8 million. The Kansas Department for Aging and Disability Services, which oversees the two hospitals for Kansans with severe mental health issues, had proposed smaller cuts of about $1 million from each.

View a primer on the Osawatomie State Hospital budget situation.

Osawatomie State Hospital has been losing about $1 million per month since December 2015 when federal officials cut Medicare payments due to concerns about patient safety. If the state doesn’t cover that loss, the hospital’s budget would shrink by about 38 percent in the new fiscal year.

Larned State Hospital is paying back some federal funds for hospitals with high numbers of uninsured patients because it claimed payments for residents in its sexual predator treatment program, which isn’t permitted. The governor’s reductions would cut the Larned State Hospital budget by about 13 percent.

The governor’s recommendations call for the hospitals to maintain the current number of budgeted staff positions. After years of staffing issues, both hospitals have started recruitment initiatives to fill vacant positions, reduce the amount of overtime employees must work and improve patient care.

Administration officials say cutting overtime and regaining Osawatomie State Hospital’s federal payments would balance the hospitals’ budgets. Those two methods appear to leave both hospitals with significant budget holes, however.

Melika Willoughby, Brownback’s communications director, said the governor anticipates Osawatomie State Hospital will start receiving federal payments again in the fiscal year that starts July 1.

“Following recertification, state hospitals will continue to receive the same amount of funding, but reinstated federal funds will replace some state budget dollars,” she said in an emailed statement.

The $11.6 million shortfall already assumes that Osawatomie State Hospital will receive $3.6 million for the 60 beds it is seeking to recertify, however. If that doesn’t happen, the gap would widen even more, to $15.2 million.

Angela de Rocha, spokeswoman for KDADS, said she is confident Osawatomie State Hospital can maintain full staffing without replacement funding from the state. The recertification process is likely to accelerate under President Donald Trump, she said, and hiring more employees will save the hospitals money by cutting their spending on overtime and short-term contract nurses, she said.

It may not be that simple. Osawatomie State Hospital spent more than $540,000 on overtime in calendar year 2016. Even if hospital officials managed to save that money by hiring additional employees, they would have to come up with about $11 million in savings.

Rep. Brenda Landwehr, center, is chairwoman of the House Social Services Budget Committee, which appears likely to advance the governor’s proposal on reduced funding for state-run psychiatric hospitals when it votes Monday.
Credit Meg Wingerter / Kansas News Service

Larned State Hospital isn’t likely to get any replacement federal funds in the coming year, because it is paying back money it wasn’t supposed to receive. The hospital spent about $3.3 million on overtime in the 2016 calendar year, so it could face a $4.7 million budget gap even if the overtime spending is eliminated.

The House Social Services Budget Committee appears likely to advance the governor’s proposal when it votes Monday, but not without reservations. Rep. Brenda Landwehr, the committee’s chairwoman, advised other members to come up with a list of priorities for hospital funding if more money becomes available. But with the state facing a $500 million budget shortfall in the new fiscal year, she doesn’t hold much hope for a windfall.

“I don’t see a lot in (fiscal years) ’18 and ’19 that we can do,” she said. “We set the (funding) bar low, hoping that we can bring it up.”

Rep. Stephanie Clayton, the committee’s vice chairwoman, worried that low funding could produce expensive problems for the mental health system in the long term, however.

“It costs us a lot of money to be this cheap,” she said.

Meg Wingerter is a reporter for KCUR’s Kansas News Service, a collaboration of KCUR, Kansas Public Radio and KMUW covering health, education and politics in Kansas. You can reach her on Twitter @MegWingerter. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to kcur.org.