Last year, the Pataki Administration stated in supporting documents that New York State had up to 20,000 excess hospital beds. Additionally, the administration said available federal and state funds would support the closure of 18 hospitals — representing up to 6,000 beds — by retiring the debt associated with those beds.

Now, the Berger Commission — the panel charged with recommending hospital closures — has called for eliminating just 9 hospitals with 4,100 beds — barely 20 percent of the identified excess.

This is barely a flesh wound.

The reduction of 4,100 beds would move New York from 16th most beds per 1,000 of population to 20th — from 3.3 to 3.1 beds per 1,000 of population compared to a national average of just 2.8.

The fiscal impetus of the Berger Commission action is New York State avoids losing out on $1.5 billion available in federal funds. However, this federal grant has some strings attached.

In all, the state must save at least $3 billion over five years as a result of slower growth in Medicaid spending through a variety of initiatives. If the state succeeds, the federal government will provide New York up to $1.5 billion over five years (at a maximum of $300 million a year) to use for other health initiatives, including funding some of the costs related to retiring debt at the nine hospitals slated for closure.

Fewer beds from these nine hospital closings must contribute to lower hospital utilization by Medicaid patients statewide. Savings are also calculated as a result of expanded Medicaid managed care resulting in lower spending. Thus, if managed care results in lower hospital admissions, then New York can still claim Medicaid savings.

In addition, the feds are requiring that the State increase ten-fold fraud and abuse recoveries — from $60 million in recoveries in FY2005 to a requirement of over $644 million by FY2011 or lose up to $500 million in federal funds.

Finally, the following must also occur to receive the $1.5 billion in federal funding. Failure to achieve any of the following milestones will result in the loss of all future federal funding.

— Maintaining a preferred drug list for all Medicaid population (starting February 1, 2007);

— Reporting hospital and nursing home baseline reporting for related Medicaid spending, utilization and debt (November 30, 2006);

— Implementing a new program to increase the number of New Yorkers with private health insurance (starting January 1, 2008 with documented success by January 1, 2009);

— Implementing a new Medicaid cost containment program (February 1, 2007) as allowed under the Deficit Reduction Act (possibly through reduced benefits for certain populations or increased premiums and co-pays for Medicaid patients);

— Expanding Americans with Disabilities Act compliance;

— Creating a single point-of-entry pilot for long-term care Medicaid recipients (starting April 1, 2008);

— Providing two reports on the Berger Commission recommendations and implementation (January 31, 2007 and July 15, 2008);

Given the excess beds cited by the Pataki administration, the Berger Commission’s recommendations are modest. Such proposals will not help the state realize the $3 billion in Medicaid savings that New York must demonstrate over the next five years in order to receive the $1.5 billion windfall offered by the feds.

—By Tarren Bragdon, health-care policy analyst, Empire Center for New York State Policy.