January 18, 2002

State budget woes linger for VUMC

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From left to right are: Dr. Jacky Hayles, longtime co-worker, daughter Sarah Nurse, Dr. James Maller, key collaborator, daughter Emily Nurse, Sir Paul Nurse, and former postdoctoral fellows Dr. Chris Norbury, Dr. Kathy Gould, Dr. Pierre Thuriaux, and Dr. Sergio Moreno.

State budget woes linger for VUMC

John Morgan, comptroller of the Treasury of Tennessee, addressed the Clinical Enterprise Group recently and outlined Tennessee’s budget prospects and the relevance to Vanderbilt University Medical Center.

Implications of the current budget impasse could have a negative effect on VUMC and health care providers statewide as heated debate continues in the Tennessee legislature over the most effective way to address the state’s current budget problems. Failure to adequately fund the TennCare program is the most likely negative consequence facing health care providers like Vanderbilt.

Managed Care Organizations receive capitation payments from the state. These capitation payments have been inadequate to cover the cost that providers incur in providing care to TennCare enrollees. In addition, should the state reduce the number of enrollees in TennCare, many of them will present themselves for care despite their lack of insurance, resulting in VUMC absorbing a greater amount of indigent care expenses.

The arguments over Tennessee’s budget deficit have raged in the House and Senate for more than three years. Various solutions have been proposed but finding an answer that will satisfy everyone has been elusive. This year’s budget, which runs through June 30, 2002, is predicted to have a shortfall of $300 million to $400 million. Next year, the budget is expected to be short by as much as $800 million to $1 billion. Without a resolution, the budget shortfalls could mean drastic changes to state programs.

“Until the State’s underlying revenue problem is resolved, all state programs, including health care programs, are subject to reduction or elimination,” said Morgan.

Faced with a $250 million dollar budget shortfall, then-governor Ned McWherter first proposed TennCare in 1993 as an alternative to massive cuts in Medicaid spending or large increases in taxes. It has been the subject of debate almost since its inception with both committed advocates and staunch opponents expressing their opinions, especially in light of the state’s current budget crisis.

Although the legislature has been debating state redistricting plans, discussion over the budget will likely resume next week. The budget and the possibility of a state income tax have been on the minds of the Tennessee taxpayers, but the budget and its implications are also being closely watched by VUMC administration as well.

“Mr. Morgan’s analysis demonstrates that the state’s fiscal crisis is real and disturbing,” said Betty Nixon, director of Community Neighborhood and Government Relations at Vanderbilt. “VUMC is one of the largest providers of TennCare. If there is not sufficient revenue to fund basic state needs, our patients and our institutions will suffer.”