ST. PAUL — Of all the state services that Gov. Mark Dayton has argued must be halted if the state government shuts down on July 1, the most serious potential impact stands to be the interruption of Medicaid payments to hospitals, nursing homes and other care providers that serve seniors, the disabled and other vulnerable people.

“It would get really difficult for us immediately,” Tom Lindh, administrator of Good Shepherd Nursing Home in Rushford, said Friday. He said at any given time, 60 to 65 percent of about 75 residents are on Medicaid.

“If it went a month or longer, it would get downright impossible. Our mission is to take care of people, not make money. But you still have to have money to pay your workers.”

The Dayton administration argued in court this week that the state’s health care, welfare and child support services should continue in a government shutdown. But while payments to individual recipients would continue under that scenario, payments to health care providers did not make the administration’s cut.

The shutdown looms amid the continued failure by Dayton and Republican state lawmakers to agree on levels of spending and taxation in the state’s upcoming two-year budget cycle. Earlier this week, the administration filed with a Ramsey County court a comprehensive list of what services it sees as critical to preserving health and safety in a shutdown. A judge will hear arguments about the administration’s plan next Thursday.

While some larger hospitals and care facilities that belong to member networks might be able to access contingency funds if Medicaid payments stop, advocacy groups said that small hospitals, homes and care providers — particularly in rural areas — don’t have access to the kind of cash they’d need to keep up payrolls, purchase food and other necessities and respond to emergencies.

“The assumption appears to be that the providers have deep enough pockets, enough reserves that they could go with an interruption in state payments,” said Gayle Kvenvold, CEO of Aging Services of Minnesota, a nursing home trade group. “But that’s where we would part company, particularly in the nursing home setting. We just don’t have those deep pockets and reserves across the board.”

Hospitals could face the added burden of patients turning to emergency room care if they’re no longer able to access service from their regular providers.

Lindh said that Good Shepherd probably has access to a line of credit that could make it possible to meet the July payroll for its 130 employees. Anything after that starts to get much more difficult, he said. “To be honest with you, after a month we’re not sure what would happen,” Lindh said.

He said Good Shepherd’s average resident is 87 to 88 years old and suffers from multiple chronic health problems. He said about half suffer from dementia, many have no family members capable of caring for them and few have any ability to care for themselves.

Many health providers that rely heavily on Medicaid payments have begun to evaluate patients to see which ones have the most serious needs and which might be able to go a little longer without their usual services.

Lisa Abicht-Swensen, chief operating officer at the Minnesota Visiting Nurse Agency, which sends health professionals on home visits, gave a possible example:

“If somebody requires us to come out every two weeks and assist them with their medication, maybe we’ll go and make sure they’re set for four weeks and not make that second visit,” Abicht-Swensen said.

“We’ll continue to serve those who will not independently survive without our services,” she said. “But we’ll probably have to stop our family health programs — all the babies and new moms, the pregnant teens we serve will have to go without services in a government shutdown.”

Several advocates said they were surprised the Dayton administration, which they’ve traditionally seen as a political ally, would recommend such provider payments stop in a shutdown. During the last state government shutdown, in 2005, a court deemed such payments a critical service that should continue; this time, Attorney General Lori Swanson — like Dayton, a Democrat — has asked the court to again continue such payments.

Republicans, locked in the budget dispute with Dayton, also criticized the administration’s decision on provider payments.

“I find it stunning that if your top priority is life safety, that we are not going to pay people who take care of folks in nursing homes or when they show up at our hospitals,” House Majority Leader Matt Dean, R-Dellwood, said to Jim Schowalter, Dayton’s budget commissioner, during a legislative hearing this week.

Schowalter replied that the decision was based on “legal arguments and legal precedents” and that it would ultimately be up to a judge to decide.

Some of the advocacy groups themselves intend to file responses to Dayton’s petition, asking the court to take a more expansive view than recommended by the administration. But Kvenvold said there was no guarantee the court would see it their way.

“We can’t afford to take anything for granted,” she said.