Sequester impact on LBJ unclear says CEO

LBJ Medical Center, which gets a large share in federal funding and subsidy, is closely watching what is unfolding in Washington D.C. with the sequester, or the across the board spending cuts in the federal budget — considering the impact it could have on hospital finances.
 
LBJ’s FY 2013 budget of just over $38 million shows that its largest funding source is from the federal government: Medicaid with $14.41 million; Department of Interior funds with $7.90 million and Medicare at $3.42 million.
 
Asked as to the impact of LBJ’s federal funding due to budget sequester, the hospital chief executive officer Mike Gerstenberger said, “The honest answer is we don't know. And Washington doesn't know either.”
 
“We are unclear if the 5% across the board cuts will impact our subsidy from the Department of the Interior. If so, the impact for the remainder of the year could be about $230,000,” said Gerstenberger.
 
The governor’s executive assistant Iulogologo Joseph Pereira told Samoa News last Friday that DOI has ordered a 5% reduction and there is also an across the board cut for all federal grants.
 
Gerstenberger said that it is also not clear what impact the reductions may have on ASG "and our subsidy from them.”
 
(LBJ had forecast in its budget $5 million for FY 2013 in ASG subsidy and $1.25 million from the 2% wage tax. The wage tax revenue has since been taken out of the LBJ budget due to the uncertainty of receiving this revenue in FY 2013.)
 
Gerstenberger explained that Medicaid is reported to be exempt from the reductions, as is Part A (Hospital Care) of Medicare. Additionally, “Medicaid Part B — Physician Services and, in our case, Dialysis — is reported to be facing a 2% reduction.”
 
“We have already incurred a 14% decrease in Medicaid eligibility and have seen no revenue from the 2012 additional 2% payroll tax, which was supposed to start in January,” he told Samoa News. “We have frozen all vacant positions, reduced overtime, and eliminated all equipment purchases and education travel.”