An advisory panel tasked with helping right the finances of struggling SUNY Downstate Medical Center is drawing up a plan that assumes a steady state of federal funding, a status the Trump administration has repeatedly signaled likely won’t exist.
The East Flatbush safety-net hospital, one of three run by SUNY, narrowly avoided closure last year when state lawmakers included a last-minute infusion in the budget and established the advisory board to deliver a plan by April 1. The possible closure has rattled local residents and politicians who said the loss of Downstate would create a health care desert in central Brooklyn and strain neighboring institutions. The board began meeting in December to help fill a roughly $100 million annual operating deficit.
But the current planning is based on the hope that hundreds of millions of Medicaid and other federal dollars will continue to flow to the facility, said SUNY Chancellor John King. If those funds are restricted it will be significantly harder to pull the hospital out of the quicksand.
“There is no question if there were significant cuts to Medicaid, it would make the financial situation at Downstate even more challenging,” King said.
President Donald Trump and top budget officials have said Medicaid and other federal funding streams could be on the chopping block when the Republican-controlled Congress hashes out budget reconciliation legislation over the coming weeks. Last week, the administration sent public and private health systems, and countless other entities that rely on federal funding, into a tailspin when the Office of Management and Budget issued a memo freezing $3 trillion in funding that was later rescinded.
Medicaid is one of the biggest funding sources in the state’s $252 billion executive budget and supports a huge swath of the state and national health care system. This year, Gov. Kathy Hochul’s executive budget proposal included $35.4 billion in Medicaid dollars, a 14% increase from the current budget. Part of that proposal includes up to $750 million to renovate the hospital building over two years and another $200 million to cover two-year’s worth of operating losses.
The panel, which includes King and eight other members, is devising a plan that includes a balance of inpatient and outpatient services.
That depends on both Medicaid and another program called Disproportionate Share Hospital funding, which supplements hospitals that serve a large portion of Medicaid recipients for overhead not covered by Medicaid. In Fiscal Year 2024, SUNY’s revenue from hospitals and clinics rose to over $5 billion, a $682 million increase driven by an increase in Disproportionate Share Hospital funding of $376 million.
Even before Trump stepped back into the White House, that funding was the target of a bipartisan group of lawmakers in Washington, who argue the program raises the cost of routine procedures that could be performed in doctors’ offices, where overhead is smaller.
“Obviously DSH would continue to be very important at Downstate,” King said.
