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State To Pay $450 Million To Hospitals For Not Treating Patients

May 18, 1985

NEW YORK (AP) _ New York state officials say they are faced with an unexpected $450 million payment to hospitals over the next two years as part of a program intended to hold hospital costs down.

The program, established five years ago during a period of soaring hospital costs, was intended to discourage unnecessary hospitalization by rewarding hospitals when they reduced the number of patients they treated.

But the number of patients has slumped for a variety of reasons, and state officials concede that they will be forced to pay hospitals far more than anticipated, The New York Times reported in today’s editions.

Brian Hendricks, deputy director of the state Office of Health Systems Management, said Friday that a number of hospitals around the state would share a $50 million bonus this year for providing less care to patients last year than they did four years ago.

If hospitalization continues to decline at its current rate of 5 percent annually, the state will pay out another $400 million next year to hospitals for treating fewer patients this year than last.

State officials said the rate of hospitalization has been dropping due to factors which include federal cost-containment policies and a strong trend toward outpatient care.

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