By Jim Kinney
masslive.com
SPRINGFIELD, Mass. — Baystate Health President and CEO Peter D. Banko was making progress in 2025, closing a $225 million hole in the health care giant’s finances.
Expenses too high, revenue too low. He cut jobs, and searched for efficiencies and ways to grow revenue.
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Then came President Donald Trump’s domestic policy bill. Now passed into law, it threatens to cost Baystate Health $146.7 million, once the bill fully takes force after the November elections.
“It’s the single largest rollback in our lifetimes of health care programs,” Banko said in a recent interview. “The work we did last year and the work we’re doing this year, that gets totally wiped out.”
“So we’re almost starting from scratch,” Banko said. “You know, I’ve worked my whole career to try to expand access and coverage, and now it just got undone.”
Access to care means insurance. And Baystate estimates an increase in the uninsured population, as people lose Medicaid, will cost the hospital system $53 million.
Then another increase in the uninsured population will come as people lose insurance subsidies under the Affordable Care Act, which will cost Baystate about $10.4 million. U.S. Rep. Richard E. Neal, D- Springfield, has predicted that the ACA subsidies will be back.
That’s a help, said Banko, who added that he’s lobbying state politicians in Boston. He’s hoping that Democratic wins in Congress in November will change health care policy in Washington. He first disclosed the eye-popping $147 million figure back in December in a forum with Neal.
The $146.7 million in lost federal money will represent 4.8% of Baystate’s bottom line. Last year, the profit margin Baystate relies on to fund capital projects and as a cushion against future misfortune was 3.5%.
Additional financial fallout includes the 340B reduced cost drug program, at $45 million; decreases in funding for Medicaid, $298.6 million; and increased cost sharing for Medicaid, $98.2 million.
Baystate’s problem is that Springfield, Holyoke and Western Massachusetts in general have a high percentage of people on these government-provided or government-subsidized health care plans.
“What are we going to tell people when 25% of our community is no longer covered?” he said. “We say, ‘Good luck. You don’t have that coverage or access.’?”
People without coverage delay care. So, conditions get worse. Cancer, heart disease, each gets worse and more expensive to treat.
“If you lose coverage in the middle of your pregnancy, are you (going to) continue to get prenatal care if you can’t pay for it?” he said. “Let’s say you’re in the middle of chemotherapy. Are you going to show up if you can’t pay for it?”
But eventually, people arrive at the emergency room. And Baystate can’t turn them away.
“So the reality for us is those people will not have reimbursement,” he said.
For Banko, bracing for impact is his full-time job in 2026.
That’ll take more maximizing of revenue, like making operating rooms more efficient to increase the number of procedures in a day. Banko needs to keep patients, and money, here.
It will take efficiencies, like AI customer service. Expect to schedule with a chatbot.
It’ll also take growing insurer Health New England , which Baystate nearly sold last year. It’s about a third of the size it needs to be, Banko said.
Health care providers will cope with mergers and acquisitions. And the best way to survive is to get bigger. Baystate and Mercy Medical Center, Springfield’s other hospital, have been in talks for years that could result in an acquisition or merger.
Banko can’t discuss a Mercy deal, citing nondisclosure agreements. And Dr. Robert Roose , president of community hospitals for Trinity Health of New England canceled a interview with The Republican on related health care topics.
In an essay for The Republican, Roose spoke about the need for transformation and change in the industry.
But Mercy’s decisions already are affecting Baystate, after Mercy closed its maternity and newborn services in December, citing a lack of staff.
Patient volume a few blocks away at Baystate’s childbirth center went up 16%, Banko said.
Beyond Mercy, Banko said economics of scale will be even more important. And managers in all of health care know it.
“We see ourselves as a safety net for some of the organizations that are struggling,” he said. “Everybody’s talking to everybody right now.
Mass General Bingham, which includes Cooley Dickinson Hospital in Northampton, announced in January that it’s acquiring Worcester-based insurer Fallon Health.
If not combining outright, Massachusetts hospitals are combining their efforts.
“So we have to have a single voice with the federal government and with the state government,” he said. “So I think it’s an opportunity for competitors to cooperate a little bit more.”
Baystate works with the public, so Medicare and Medicaid recipients are up to date on new paperwork and work requirements.
“You have to fill out paperwork every year to show you qualify,” Banko said. “They’ve made that every six months.”
The problem is, recipients don’t do it now, even though it’s only once a year.
“Every six months is going to be a burden,” he said.
Baystate’s trying other things to build more business.
Its flagship — Baystate Medical Center in Springfield with 780 beds — is nearly always full. But Baystate Noble Hospital in Westfield is not.
So in 2025, Baystate piloted a program. It started paying for transportation, encouraging patients in the Springfield hospital who live close to Westfield to transfer and be treated there.
It opens up beds in Springfield and cuts wait times in the emergency room.
Banko also announced plans this month to expand back into Ware, building a primary care and convenient care practice there, taking the place of the closed Baystate Mary Lane Hospital.
Banko said Baystate also hopes to tap the federal Rural Health Transformation Fund and expand a family medicine residency program from Greenfield to Ware.
The program trains 12 new medical residents — taking in four new doctors a year — at Baystate Franklin in Greenfield. The plan would be for faculty and residents to staff a clinic in Ware.
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