STEVE BRAWNER

Governor Mike Beebe speaks at a press conference after signing the tobacco tax increase in law at the Capitol February 16. Surgeon General Joe Thompson smiles behind him. At left is Paul Halverson, director of the Department of Health.

Programs funded by a recently-passed statewide tobacco tax increase could help improve hospitals' fiscal health at the same time they improve the health of Arkansans.

The signature program of the Governor's Healthcare Initiative is a statewide trauma system that will provide funding to hospitals based on a four-tier system. Arkansas is the last state to develop a statewide system.

According to Donnie Smith, director for the Department of Health's Center for Health Protection, the two or three hospitals that qualify for Level 1 status will receive a million dollars per year. Currently, only hospitals in Little Rock have enough volume and research capacity to qualify, though that could change after a medical school – also funded by the tobacco tax – is built in northwest Arkansas. Meanwhile The Regional Medical Center at Memphis, which provides care for many Arkansans, will receive $500,000 annually.

Smith said about 7-10 hospitals will qualify as Level 2 hospitals and receive $500,000, while 10-15 Level 3 centers will receive $125,000 and the remaining Level 4 hospitals will receive $25,000 each.

The system will allow hospitals to better provide care for victims of trauma, but what about the business that small rural hospitals will lose when their patients go to a higher level hospital? Smith said he's never heard such a complaint from rural hospital officials, who currently are faced with trying to treat and transport victims without the capabilities of doing so. Moreover, the new system will result in some less severely traumatized patients remaining at their hometown hospitals, where they can be treated appropriately, instead of being transported to a larger out-of-town hospital.

According to Paul Cunningham, senior vice president for the Arkansas Hospital Association, the system will provide new funding for services hospitals already offer. "Additional funding for a system to help offset costs that are already being incurred, we think it's a good thing," he said.

The legislation raises taxes on a pack of cigarettes by 56 cents while increasing the tax on other tobacco products from 32 percent of the wholesale price to 68 percent. The new taxes went into effect March 1. Thanks to federal matching dollars, the $86 million in new revenue should generate more than $170 million annually. The trauma system, which is not eligible for federal matching funds, will cost about $28 million a year.

The state will waste little time in implementing the program. Smith said an application process for facilities to state their intent will be developed by the first of May and that applications from hospitals will be accepted in May and June. The first dollars will be spent by September 1.

Planners expect that funding a trauma system through a tobacco tax will save lives affected by both trauma and cigarettes. Injuries due to accident are the leading cause of death for Arkansans between the ages of one and 44, and in touting the measure, the governor's office said a statewide trauma system would save 206 lives annually lost to auto accidents alone. Meanwhile, increasing the cost of cigarettes by increasing the tobacco tax is expected to lead to fewer youths purchasing tobacco products.

Other funds will pay for about two dozen other initiatives, some of which will directly affect hospitals financially. These include expanding ARKids First availability to every family with an income of up to 250 percent of the poverty line. For a family of four in Arkansas, that equals $53,000. According to Department of Human Services spokesperson Julie Munsell, the Department of Human Services expects about 20,000 currently uninsured children to enter the system.

The initiative should benefit hospitals in other ways. The Northwest Arkansas medical school will create a bigger pool of trained medical personnel. According to Munsell, new funds for preventive education will mean less acutely ill patients and more opportunities for hospitals to provide preventive care. Medicaid records will be available electronically, giving clients an electronic medical home and making Medicaid information more portable.

The tax also will pay for new funding for home health care and community health centers, expanded coverage for small businesses through the ARHealthNetworks program, and prevention and treatment of many diseases, including stroke and various types of cancer. It also will fund adult dental care, drug and alcohol treatment for pregnant women and children, an expanded flu shot campaign, and services for children with autism.