[Congressional Record (Bound Edition), Volume 145 (1999), Part 9]
[Extensions of Remarks]
[Page 13232]
[From the U.S. Government Publishing Office, www.gpo.gov]



      UPON INTRODUCTION OF THE COMMUNITY HOSPITAL PRESERVATION ACT

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Wednesday, June 16, 1999

  Mr. LaFALCE. Mr. Speaker, today, I am introducing the Community 
Hospital Preservation Act. The purpose of this legislation is to 
provide a financial lifeline to those community hospitals that are 
struggling for survival.
  Hospitals in general are under significant financial pressure from a 
number of sources, which include Medicare and Medicaid cuts, reductions 
in managed care reimbursements, and a significant increase in the 
number of uninsured patients.
  Small, non-profit community hospitals are particularly at risk. As 
non-profits, they lack the access to equity capital that for-profit 
hospitals have. As smaller hospitals, they lack the economies of scale 
and negotiating leverage that larger hospitals or chains have in 
dealing with suppliers, insurers, and managed care firms. In my 
district, statewide, and nationwide, we are seeing community hospitals 
cutting health care services, laying off employees, and in too many 
cases, fighting for survival.
  The Community Hospital Preservation Act would help stabilize the 
finances of these hospitals and keep them operational, by authorizing 
up to $1 billion a year in capital loans over five years for non-profit 
community hospitals in financial distress.
  Under the legislation, community hospitals are eligible for 
forgivable capital loans if they are non-profit, have assets of less 
than $75 million, are experiencing financial difficulties, and are an 
``essential source of basic hospital health care services'' in the 
local community. The forgivable loans may range from $100,000 to $2.5 
million per hospital. Each loan must be matched dollar for dollar with 
a state, local, or private grant or loan. If the hospital continues to 
meet annual eligibility criteria, including operational efficiencies, 
the capital loan will be forgiven over time, and thereby converted into 
a grant.
  Non-profit community hospitals serve an essential public purpose in 
their local communities. Hospital closures or service reductions 
adversely affect the families and individuals who rely on that hospital 
for life-saving care. Hospital closure also undermine the broader 
economic health of a community. There is clearly a public purpose in 
maintaining and enhancing these institutions.
  Two years ago, as part of the Balanced Budget Act, Congress reduced 
Medicare and Medicaid reimbursements to hospitals. The same federal 
government that has taken such actions should be prepared to step in to 
soften the blow of these cuts for those hospitals most at risk. Both 
political parties have pledged to set aside trillions to save Social 
Security for our senior citizens. It is not too much to set aside a 
tiny fraction of that to save the hospitals that provide essential 
health security for


those same seniors, as well as so many others.

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