Number one priority for board members
Getting the hospital's bottom line in the black and keeping it there appears to be the first goal of the Fulton County Hospital Board. Suggestions about how this could be accomplished were presented by John Ed Welch and Bill Couch of Hughes, Welch and Milligan at the Nov. 26 regular meeting of the hospital board.
Finding a way to bring in the needed income to keep a hospital operating is a problem that small hospitals everywhere are facing. Four years ago, Fulton County Hospital was approved as a critical access hospital which allows the hospital to be reimbursed for their Medicaid and Medicare charges at a higher rate. However, according to Couch and Welch, this designation is not enough by itself; other services have to be developed that will bring in additional revenue.
"What we have found is that you've got to have a funding mechanism (to make up) for the portion of your costs that Medicare and Medicaid will not pay and also for your bad debts," Couch said. "Medicaid and Medicare will pay you their portion of the expenses, but its expenses they say are reimbursable.
"Critical Access designation has kept a lot of small hospitals open to this point," Couch said. "It's not a cure-all, it's a Band-Aid for the time being. A lot of small hospitals were built in the 50s and 60s, and they're old and run down. How are they going to replace that facility with a patient average of 3 to 8 to 10 a day? It's not going to happen. So critical access has allowed small hospitals to come in, rebuild their infrastructure and get a fresh start. That's what you're doing now with your construction project."
With the completion of the new addition at FCH, new services will be available to area residents which should bring in additional revenue. Whether this increase will be enough to continue as a county hospital won't be known for some time. The new addition is scheduled for completion around June 2008.
"Right now we have a 1/2 cent sales tax that goes toward paying the debt on the new addition," Couch said. "That's basically it. We have no other profit center. It's fortunate that the residents of the county saw fit to give us the 1/2 cent, but it may not be enough. If you want to operate this facility the way it is, under this governance, without going forward with an agreement with BRMC, you're going to have to find a funding mechanism for your bad debts and expenses that Medicaid and Medicare will not participate in."
Couch said that some hospitals operate a nursing home or home health agency as a mechanism for added revenue. Although those two services are usually profitable, that wasn't the case for the home health agency the hospital was operating, according to Barry Aldridge, board chairman.
"The home health agency was dragging our bottom line down, which made our Medicare and Medicaid reimbursements lower. It wasn't that profitable," Aldridge said.
In February of this year a lease agreement for FCH's provider number was reached with the LHC Group of Lafayette, La., to operate the home health agency in Salem. The company, which began operations in Salem on May 1, formed North Arkansas Home Care and relocated the agency to a building near the Salem City Park.
LHC Group was ranked number seven on the Forbes List of "America's 200 Best Small Companies" in 2007. The group's services include home health agencies, hospice, Lifeline, inpatient and outpatient rehabilitation, long-term care, private duty nursing, diabetes self-management and wound care. They employ 3,400 people throughout locations in Texas, Louisiana, Mississippi, Arkansas, Alabama, West Virginia, Kentucky, Florida, Tennessee, Georgia and Ohio.
According to Denise Innis, co-interim administrator, the hospital received $25,000 from LHC plus an additional $5,000 per month for the next 10 years. They also have an option to renew the lease for two more, five-year terms.
"This is going to help us eventually receive a higher reimbursement from Medicare and Medicaid," Aldridge said. "We need to get our revenues in the black, and this will help."
"There's been some questions raised about the ambulance service and whether it is profitable or not," Welch said. "It appears it has not been profitable in the past. Right now, it is a cash drain on the hospital."
According to Couch, ambulance expenses are running $15,000 to $20,000 more a month than what Medicare pays for this service.
"Back in the day, the ambulance like all of Medicare, was paid based on cost. Then they went to a system where it was fixed, and it's now on a per run rate, and that's all you're going to get. There's no cost substance to it," Couch said. "The ambulance could be paid cost (from Medicare) if there isn't another ambulance service within 35-miles, but there is."
Welch said the 35-mile rule pertains only to hospitals. If the county was to reassume control of the ambulance service it would be reimbursed at a higher rate and should be able to break even or show a small profit.
"You're going to get a more favorable reimbursement rate, a more favorable charge structure than you have right now, if the county, as a separate entity, runs the ambulance," Welch said. "That new entity will be able to charge more and get paid more, paid better than what the hospital is getting paid now."
Aldridge said the hospital is receiving about $1,600 a month from the county which is basically paying the lease for the ambulances. The hospital pays the salaries, fuel, expenses, insurance and employee benefits.
"Our expenses (for the ambulance service) is X number of dollars a year. Then, if you look at the charges, it looks like there is revenue coming in. But, we only collect an average of 35-38 percent of what is charged. The rest goes out as bad debt," Aldridge said. "The problem is that it hurts our numbers, it hurts our cost reimbursement for the entire hospital. So not only are they losing money per say as an individual department, but on the revenue for the whole hospital, it's hurting us a percentage on reimbursement. It's sorta double-dipping into the hospital itself. We're losing money twice by having an ambulance service."
Board member Danny Perryman said the ambulance service might be the difference in keeping the hospital in the black. "The county is paying us $20,000 a year and we're losing $180 to $250,000 a year. Last year the hospital absorbed all of that and still only lost around $220,000," Perryman said. "It would appear to me that this ambulance thing is as big a revenue eater, the biggest problem we have."
"I took a look at some rough numbers on this," Aldridge said. "We're in our fourth month of the fiscal year and the expenses for this service is about $190,000. It's showing a $268,000 revenue, but if your only getting 35 percent of that, that's only $94,000 coming in. It's not a huge difference and with the change in charging it could work out to be a balance."
Welch said that if the county paid a lease to the hospital for the space where the ambulances are based, that could be a revenue source for the hospital.
"The hospital would actually charge the county a lease to house the ambulances where they are now, but would be set up as a separate entity," Aldridge said. "They would have their own billing code and in the lease the hospital would assist the county by doing the billing for them. We're not trying to hurt the county by no means. If they can get the ambulance service to a break-even status, we could still have our hometown county ambulance and not have to worry about a private service coming in and deciding they didn't like their contract and leave after the first year.
"I don't want to sound blunt," Aldridge said, "but the ambulance service was the county's in the first place 25-30 years ago. They gave it to the hospital cause nobody wanted to mess with it, or try to run it, or try to do the billing. The hospital has held on and funded the county's ambulance service over this entire period of time and it's the hospital that has suffered the expenditures and now the hospital is suffering. We need the monies to keep our hospital alive. Somewhere there's got to be a payback or assistance in my opinion."
Board member Albert Roork said looking into a private ambulance service could be an option for the hospital. "I don't have a problem with the county operating the (ambulance), but if it's your own business and that is your bread and butter, you're going to try harder than you do if you're a government entity," Roork said. "You're going to try harder to satisfy generally. I don't have a problem with a private service. I think that could work out fine. The best ones in the state are private."
"We've just got to figure out a way to make the hospital work right now," Perryman said. "According to the P&Ls for the last fiscal year, it (the ambulance) looks like it could have made a difference for us. I guess we could always go back and ask the residents for another sales tax, but I don't think anybody wants to do that if there's any way out. Although, they would probably rather help than lose the hospital."
Board members asked Welch and Couch to put together a projection of what the revenue and expenses would be if the county assumed control of the ambulance service.
Aldridge said he has asked to speak to the Fulton County Quorum Court about this issue during their regular meeting on Dec. 10. He told board members this was an issue that would have to be addressed soon.
The hospital showed a profit of $28,114 for the month of October.
"We're on an excellent trend," Aldridge said. "We're catching up on all of our expenditures, and we are making payroll without having to dip into our line of credit. Those are numbers we haven't seen in a long, long time."
Aldridge said the profit for the month was due to changes the hospital has implemented in the past few months. One change that has brought about the biggest impact is a decrease in the number of days in the hospital's billing cycle. Aldridge said that at one point it was taking over 100 days to bill for a patient's services after they left the hospital.
"We've got the time period reduced to 74 days now, and we're working on reducing those days even more,"?Aldridge said. "The average billing cycle is 60 days for most hospitals. After a patient leaves, their chart has to be gone through to code all the services the patient has received. Then it goes to the doctor for dictation of the patient's chart. Then the charges have to be billed to Medicare, Medicaid or private insurance.We send most of this by a computer which helps. But, if we get even one code wrong, it'll get kicked back to us and we have to find the error and resend it. There's just a lot that has to be done to get the billing out."
October Hospital Stats
The monthly reports showed there were 68 inpatients at the hospital during October, slightly down from last year with 76. A total of 390 people used the emergency room in October. Dr. Griffin Arnold saw 89 of those patients, Dr. Jim Bozeman 131, Dr. Michael Moody 2, Dr. Becky Phillips 82 and Dr. Kuzas 85.
During the past 12 months 3,802 people have used the Emergency Room at the Fulton County Hospital. Doctors working the ER were: Arnold 1,135; Bozeman 1,245; Moody 5; Phillips 856; Kauffman 1,198; Kuzas 117; and Scribner 246.
During the past 12 months 815 people have been admitted to FHC. Of those 815 patients, 654 were Medicare, 14 were private insurance (Medicare), 41 were Medicaid, 5 were Ped Medicaid, 4 were Champus, 51 were insurance, and 46 were cash.
Aldridge said he had met with Ron Peterson and Barney Larry from BRMC and had reviewed a list of proposals that BRMC would like to see in the lease. Aldridge said that many of the first proposals would not be good for FHC. He said BRMC would make some revisions and submit another working list to the board to review. "I ask them to attend tonight but they weren't ready with a proposal," Aldridge said. "They will probably be at the next meeting to go over some things. Again, nothing is set in stone."
Aldridge said that negotiations between BRMC and the hospital is comparable to buying a house -- you make an offer, they counter the offer, and so forth until an agreement is reached, or not.
After reviewing some of BRMC's first proposals Perryman commented, "That's ridiculous."
The board was told that Dr. David Kauffman is currently participating in an in-house rehabilitation program which he should complete by Christmas. Bozeman said that Kauffman will not be finished in time to meet with the Arkansas Medical Board in December and that the medical board would not meet again until February. Kauffman's license was suspended earlier this year because of a substance abuse problem. The AMB ordered him to complete an in-house program before they will consider a request to reinstate his medical license.
Dr. Jeff Summerhill, D.O. was given credentials to become an active doctor at FCH. Summerhill was licensed in 2001 as a family practitioner and is trained in EGD and colonoscopy.
Plans will proceed to look into the possibility of a Rural Health Clinic. Paperwork must be underway before the end of the year, even if all details have not been worked out.
"Whether we go with BRMC or not, or stay independent, we've got to progress," board member Vicki Fowlkes said. "We don't have any other option."