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Monday, May 2, 2016

Hospital financial woes continue

Monday, September 13, 2010

The Fulton County Hospital Board faced a tough challenge when it met in special session, Sept. 2. With pay day just one day away, the hospital was $26,000 short. The board asked the Bank of Salem for a short term loan, promising pay back, as soon as a Medicaid reimbursement payment was received. Employees were paid on time and the board took steps to get better control of finances.
Fulton County Hospital employees were understandably worried last week, when word circulated the hospital did not have enough cash on hand to meet the Friday, Sept. 3, payroll.

"We're about $26,000 short of making the actual payroll and, then, we have $48,000 in taxes to pay on the payroll, next week," CEO Joe Hammond told a special session of the Board of Governors on Sept. 2.

Hammond explained a $250,000 line of credit with the Bank of Salem has been fully used and the bank was unwilling to agree to an extension.

Adding to the frustration was the fact the hospital is due an estimated $859,000 in Medicaid and Medicare reimbursements. The cost report has been submitted but, it could take up to 75 days for the payments to be processed by the federal agencies.

Hammond told the board he had further discussions with the Bank of Salem and provided documentation showing the federal money is due.

Chairman Albert Roork expressed optimism the bank would extend the line of credit, if it knew it would quickly be paid back.

"We are going to need to adopt a resolution," said Roork, "pledging this money (the expected federal reimbursements) to the Bank of Salem, first and foremost, when it comes in and, hopefully, they will have mercy on us, as they have in the past, and will be gracious enough to cover us tomorrow so we can get everyone paid."

During discussion, board members Danny Perryman and Bill Pace indicated they would rather see the bank assistance take the form of a short term loan.

"I think it should be a separate note," said Pace. "That means you are going to pay it off. If you tack it on and increase the line of credit, chances are you are going to spend this money on something else and not pay down the line of credit."

Board members did hear some encouraging news from Bill Couch of Hughes, Welch, and Milligan CPA's.

Couch indicated he had spoken with a friend in Little Rock who works for the agency which handles Medicaid reimbursement.

"He said to send the Medicaid portion of the cost report directly to him and he can go ahead and do the tentative, almost immediately, on the Medicaid and we should have that money ($264,000) next week," said Couch.

The board finally did pass a resolution authorizing Hammond to seek a short term loan for $74,000 from the Bank of Salem to be paid back when federal reimbursements are received.

By Friday, Sept. 3, the bank had agreed to the proposal and employees were paid as scheduled.

But Thursday's meeting did not end with the vote to seek a loan. Board members remained for a deeper discussion of the hospital's financial problems and what to do about them.

When asked about making payroll in two weeks, Hammond expressed hope the latest crisis is over.

"We'll have money coming in," said Hammond. "We'll have our regular cash flow coming in and we'll have to watch it. Obviously, this is a very uncomfortable moment but, you realize we have $850,000 that's due us."

When pressed on how overdue the hospital is in paying its bills, board members were shocked to hear that bills 90 and 120 days old have not been paid.

"Until we get our bills brought within 30 days, I think we need to shut off spending any money," said Pace. "This hospital board (recently) approved a $40,000 sign and we've got 120 day past due bills that we can't pay and that's got to stop."

Board member Perryman quickly agreed. "I'm for a hiring freeze and restrict any new expense we can do without until such time that we can see our way to pay for it," he said."

In a discussion that followed, board members discussed how to implement a hiring freeze.

It reached general agreement that employment would be frozen at the number of employees on the payroll as of Sept. 2. However, if an employee leaves a crucial position, that position can be filled.

Perryman also suggested a further spending restriction. Currently, CEO Hammond can authorize expenditures of up to $5,000 without obtaining board approval. Perryman proposed that amount be reduced to $2,000.

Both the hiring freeze and the spending restriction were approved by the board.

Board members told Hammond and Couch they no longer want to see only the hospital's total debt. They also want to see how many days past due debts are in arrears.

"This is not shooting at you," Perryman said to Hammond, explaining his desire for more spending restrictions.

"But, the fact of the matter is, this is where we are, so, what are we going to do about it?... It (spending restrictions) keeps the board more abreast of what's happening and we know more what to expect whenever we get here to inspect the figures."

Board members pointed out the key to easing the hospital's cash crunch is for the new clinic to begin producing steady revenue and for the numbers of people using the hospital to increase.

All agreed those changes will not happen overnight and more hard work is ahead to get the hospital on firm financial footing.

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I am writing in response to the article documenting the financial crisis at Fulton County Hospital. In my experiences with the Medicaid and Medicare payment system if bills are submitted timely, they are paid timely, e.g., Arkansas Medicaid is to be billed monthly and Medicare should be billed according to their schedule with correct diagnosis codes and records which match those codes. If someone has been in the hospital for pneumonia and the only thing written in the chart is "watching TV, resting at this time or family visiting," it sounds like they are on a vacation and of course Medicare is going to ask for more documentation and it slows the process down. Medicare inquires must be answered as soon as they are received...you won't get reimbursement until their questions have a reasonable response. The other thing I do not understand is why the hospital turned down purchase by Baxter County Regional Medical Center. With a large hospital providing an umbrella of care Fulton County would be able to get supplies at a discount, would have resources for equipment that needs to be repaired or replaced and would have a back up when there is a question of being unable to pay employees and vendors. Neither should have to worry about being paid on a timely basis and the hospital would have a better reputation in the community. Customer service is also extremely important. If one is pleased with their stay they will tell 7 others. If they are not pleased they will tell an approximate 63 people. (This was a documented study a few years ago.) When you note how small this community is, it's easy to see how important those who stay report a good experience while there. After all, if it were not for the patients no one would have a job.

-- Posted by reflections on Tue, Sep 21, 2010, at 8:11 AM

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