Walking around Ellenville Regional Hospital, you get a sense of a business trying to make do with the space it has. The 25-bed teaching hospital is in a building that dates back to the 1960s, in a rural area of Ulster County by the Catskill Mountains.
Support Services Director John Gavaris gives me a tour of how it’s changed over the years: in 2021, they reconfigured the ER to make more isolation space during the COVID-19 pandemic. In 2019, they took down walls to create more gym space in the physical therapy unit. And around 2007, they spent $70,000 to expand four hospital rooms.
“$70,000 for one room," he notes. "We had to re-do plumbing. We had to cut a trench. We had to put a new sewer line outside, so it was quite a project.”
It turns out, renovating health care spaces is very expensive, especially when you’re behind on roughly 50 years of building code. Hospital President Steven Kelley says fully renovating Ellenville would cost about the same as building a new hospital. So that’s what he says they’re trying to do next door, to the tune of about $83 million.
“We have big problems here. We need new boilers; we need new air conditioning," he says. "We need big items that require major, major renovations.”
Kelley says they’ve raised about half of that money so far, and he’s hopeful New York state will plug part of the gap. All of this comes as industry leaders warn of potential economic headwinds as a result of the “Big, Beautiful Bill.” The budget cuts federal Medicaid spending in ways that could cause up to 1.5 million New Yorkers to lose their coverage, according to Governor Kathy Hochul. But hospital emergency rooms can’t turn away patients just because they don’t have insurance. They will continue to care for people — just without getting paid.
How this will impact Ellenville’s budget, Kelley says it’s too soon to tell. He says they’re in a good spot financially, but currently, Medicaid patients account for roughly a third of their business.
“There may be other providers that will be impacted, but this will be very disproportionately shouldered by hospitals," says Kelley. "It’s really a cut to hospitals.”
The “Big, Beautiful Bill” cuts more than $1 trillion in federal health care spending over the next decade to extend and expand President Trump’s tax cuts from 2017. It does this in part by establishing work requirements on able-bodied Medicaid recipients (80 hours a month) that will undoubtedly kick some people off the program.
Cristina Batt, senior vice president of federal policy at the Healthcare Association of New York State, says the law also caps provider taxes used to fund the state’s share of Medicaid, and cuts funding for New York’s Essential Plan.
“Based on the numbers that we see in the legislation, and now law, we are anticipating upwards of 63,000 jobs lost," she adds. "That’s a $14.4 billion loss in economic activity throughout the state.”
Ulster County Executive Jen Metzger says EMS providers, who are already struggling across the region, could face the same squeeze as hospitals. And, depending on how the state handles its budget following the cuts, she says it’s possible the county could be forced to pay a larger share of reimbursements.
"Our health care system could really be put at risk, and ultimately it’s going to raise costs for everyone," she notes.
Much of the “Big, Beautiful Bill” doesn’t take effect until at least 2026, but some hospitals in the Hudson Valley are already making cuts. Last month, Garnet Health Medical Center in Middletown laid off 42 employees and dropped two outpatient services (for diabetes and pulmonary rehabilitation). The hospital also downgraded its trauma center from Level II to Level III, meaning it will increasingly transfer patients with serious injuries to other facilities. CEO Jerry Dunlavey cited “anticipated federal cuts to the Medicaid program” in the decision.
Batt says it’s likely more hospitals will take their lead.
“We do expect a contraction in the system, both in terms of adding any new service lines — that’s probably going to be very difficult right now, and that’s going to impact everybody in the community," she says. "We’ll probably see a lot of construction projects or capital improvement projects get pushed aside as hospitals are trying to just fortify and prepare for this avalanche that is coming towards us in the very near future.”
After decades, Ellenville Regional Hospital has become a big part of its community. For starters, the next-closest hospitals are at least 30 minutes away. It also offers free exercise classes, overdose prevention programs, and even senior housing across the street.
Gavaris says he worries federal cuts could put a damper on its construction plans.
“Our model of being able to do this is us taking out a loan of $25 million and being able to pay that back on the revenues that we make from seeing patients," he explains. "And if our revenues drop, that could impact our ability to repair a loan. So, it's a concern."
Kelley is a little more optimistic.
"If we are able to get enough funding from the state, I still think the model will work," says Kelley. "It’s hard. We’re a profitable company, and a lot of hospitals in New York are really struggling and are dependent on the state to kind of prop them up. So, it’s hard to help folks that have had 19 consecutive profitable years and are halfway through their twentieth — although that could change here, with these changes to Medicaid.”
