Hopkins, 4 other hospitals win rate increases

State grants upgrades for 2 Harford facilities, 2 on Eastern Shore

October 04, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

State hospital rate regulators approved a temporary rate increase yesterday for Johns Hopkins Hospital and permanent rate boosts for four other hospitals, including Harford County's Upper Chesapeake Medical Center, which ran into unexpected financial difficulties after its opening nearly a year ago.

Harbor Hospital Center in South Baltimore was also seeking higher rates, but the Health Services Cost Review Commission staff recommended a 2.02 percent cut. The hospital requested a hearing to challenge the recommendation.

The flurry of rate reviews reflects declining hospital margins after several years of tight controls on rates, regulators and hospital officials said.

The commission grants across-the-board increases based on inflation. Beyond that, any of the state's 52 hospitals can ask for a raise in rates based on their own financial information.

The commission decides on rate requests after comparing the hospitals' charges to those at similar institutions.

Such individual rate reviews have been relatively rare. But in addition to those considered at yesterday's meeting, eight more are pending, Robert Murray, executive director of the commission, said.

Larry Lawrence, a longtime vice president of the Maryland Hospital Association, said the "unprecedented amount" of individual hospital reviews came because "for three years, rates were dramatically depressed."

Before that, he said, there were few reviews because, "Hospitals didn't find themselves in such a dire position."

Murray said the commission will also be seeking to identify hospitals that charge more than their peers, with the goal of ordering some rate cuts. Given that, he said, hospitals should still be able to get an increase next year, although perhaps somewhat smaller than the rate of inflation.

In yesterday's actions, Hopkins got a 2.4 percent rate increase on top of a 1.1 percent temporary increase granted in April.

Murray said Hopkins should receive at least as much as the two temporary increases when it completes an application seeking a 7 percent boost this year and another 7 percent next year.

The temporary rates will remain in effect until the commission reviews the application for a permanent rate change, a process likely to take a few months.

The commission also agreed to let Upper Chesapeake retain a 5.7 percent temporary rate increase granted in May. That means the new hospital in Bel Air will be charging 3 percent above the average of its peer group for the next two years, to cover additional costs related to its move from Fallston and to a higher-than-expected patient load.

About a third of the amount charged over-average would be paid back in lower rates over the next few years.

Also approved was a 1.23 percent increase over current rates for Harford Memorial Hospital in Havre de Grace.

Lyle Sheldon, chief executive of Upper Chesapeake Health, which operates both Harford County hospitals, said the rate increases, plus cost reductions that included eliminating 158 jobs, should allow the hospital system to return to the black.

Memorial Hospital at Easton received a 2.33 percent increase. Dorchester General Hospital, in Cambridge, got an additional 1.96 percent.

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