Nursing home administrator Nancy Kleinberg started getting anxious a few weeks ago as she read accounts of the impending stalemate between Gov. Rendell and Republicans over the state budget.
But a few days ago, Kleinberg, co-owner of Park Pleasant Nursing Home in West Philadelphia, got confirmation that her biggest worry may soon become a reality: a letter from the state Department of Public Welfare stating that medical assistance payments to nursing homes may be delayed if the budget impasse continues.
To Kleinberg it was devastating news. More than three-quarters of the residents who live in her facility rely on medical assistance. And her facility receives, on average, a monthly $500,000 reimbursement from the state to provide care for them.
Kleinberg is one of thousands of providers of social and health care services across the Commonwealth who may suffer if lawmakers and Gov. Rendell cannot reach a budget deal in the coming weeks.
"Most small businesses can't do without half a million dollars," said Kleinberg, whose nursing home has been family owned and operated since 1947 and now serves 123 residents. "We do have reserves, but they are not infinite. We have to pay salaries and bills for medical supplies, food, utilities ... so cash flow is a problem."
The most affected provide services to the medical assistance population, including hospitals, nursing homes, and doctors who help an estimated two million people who cannot afford to pay on their own.
In addition, organizations that provide mental health services and assistance for the mentally impaired, along with counties that provide child welfare services, also were notified that the state may have to issue them IOUs until the budget is resolved.
Services won't be forced to shut down immediately. Some operations have reserves, others can tap lines of credit.
A notice advising providers that "some payments may be delayed" has gone out in each of the last seven years because the legislature and the governor have failed to reach agreement before July 1, the beginning of the new fiscal year.
But the level of concern is heightened this year, some advocates say, because the governor and the Republican-led Senate are so far apart on how to solve the budget crisis.
Rendell, who has made across-the-board budget cuts but is reluctant to cut much deeper, has proposed a 16 percent temporary hike in the personal income tax to fill a $3.2 billion budget shortfall. Senate Republican leaders are vehemently opposed to any tax increase and say cuts must go deeper.
"Providers are really nervous . . . if [the stalemate] lasts a longer period of time," said child advocate Cathleen Palm, who works with a variety of groups across the state that may need to use lines of credit to stay afloat. "The question will be how well are they working with local financial institutions."
Palm, like Kleinberg, said others are concerned about the ripple effect on private groups and their subcontractors who provide most of the human services programs.
And it's not just the private sector that could be in trouble. Pennsylvania's 67 counties, which act as the conduit for state money to flow to local social-service providers, are also bracing for the effects of a protracted budget fight.
"Many counties will run out of reserves," said Doug Hill, executive director of the County Commissioners Association of Pennsylvania, adding that dipping into reserves or borrowing is painful. "You're either losing interest or you're paying interest."
Sue Walther, executive director of the Mental Health Association of Pennsylvania, said the possibility of late payments comes at a time when mental health budget lines are being cut from at least $3 million under Rendell's proposal, or by as much as $25 million if the Senate Republican's budget plan was adopted.
Walther, whose group represents 17 affiliates including the Mental Health Association of Southeastern Pennsylvania, says late payments are just one more trial for hard-hit providers struggling to protect what funding they can get during a tight budget year.
"We're trying to make the case it will cost them more, on the other end, if a patient ends up in an in-patient facility or in jail," she said.
Kleinberg said if money becomes tight, the first thing she would do is contact her suppliers, explain the situation, and ask whether they would accept a delayed payment. If that failed, she would dip into any reserves.
After that, the only thing she has to fall back on, she said, would be asking her staff to work for a few weeks without pay with a promise to be reimbursed at a later date.
And for a small home like hers, there is no financial cushion of a parent company.
"What makes this even harder is that we don't know how long this delay will last," she said.
Kleinberg says she feels she is speaking for a large population with little political clout.
"Nursing home residents, even though they are such a huge population, don't have a political impact because it's not like they can easily write letters or make phone calls," she said. "Their voice is small but their need is large."
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