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Sunday, May 1, 2016

OMC proposes changes to deal with FCH financial problems

Wednesday, December 28, 2011

After two months of managing the Fulton County Hospital, the Ozarks Medical Center has developed a list of proposed changes to cut spending and bring in additional revenue to address the hospital's serious financial problems.

At the Dec. 20 meeting of the Hospital Board of Governors, interim administrator Kim Thompson said adding new sources of revenue, like reopening the hospital's operating room, cannot be done immediately, but changes in hospital operations can help the bottom line.

"You're talking about a lot of cost (to add new services). Maybe in the future, but first we've got to get this place healthy and, unfortunately, that is going to mean some hard decisions," said Thompson.

November Financial Report

After an increase in usage in October, November's financial picture shows that emergency room visits, patient admissions and swing bed unit patients were down.

Still, the hospital's net loss was $51,396, which was less than expected.

Board member Jerry Blevins noted expenses were down.

"You're down $150,000 from what we were spending a month?" Blevins asked. "To me, that's very good," an opinion other board members echoed.

Thompson said she is watching all expenditures very closely, and a reduction of employees, changes in nursing staffing policy, and the hospital beginning to receive OMC purchasing discounts for supplies have all helped cut monthly spending.

The hospital has about $233,000 in cash on hand but Thompson warned, "We have some big things coming up."

* The Bank of Salem is owed a $25,000 payment on the hospital's line of credit, which has been paid down to $175,000.

* Medicare is due about $90,000 at the end of January, the amount of overage paid to the hospital for treating Medicaid patients.

* The hospital still owes $397,000 to creditors who, according to Thompson, are "knocking on the door demanding payment."

Home Health License Sale

An immediate solution remains closing the $1.7 million deal to sell the hospital's home health license to the LHC Group, a Louisiana based home health agency.

"We know these next few weeks, until this home health license sale is assured, we are going to have some cash crunches," said Thompson.

Thompson told the board LHC attorneys have finally submitted a first draft of the purchase agreement, but she called it a disappointing "boilerplate contract" that the hospital's attorney had to heavily rewrite and resubmit to LHC attorneys.

Board Chairman Bill Pace is frustrated that the sale, originally set for completion Dec. 1, is still tied up in red tape. One main problem is LHC's contention that, instead of just hospital board approval, Quorum Court must pass an ordinance approving the license sale, and the $1.7 million must be put in an escrow account for 60 days.

"We have a set of attorneys in Louisiana and a set of Arkansas lawyers, and Louisiana doesn't want to give into Arkansas law. Arkansas law says 'you do not have to have it (Quorum Court ordinance).' They say 'we want it.' So that has been the hold up all the way through."

Thompson said she would keep working with the hospital's attorney to try to get the process moving. At Thompson's request, the board passed a motion authorizing OMC President and CEO David Zechman to contact LHC executives to discuss problems holding up the sale, and possible solutions.

"I don't think LHC has any control over what's happening," said board member Danny Perryman. "They are depending on their attorneys, just like we are. I think we've got more of an attorney posturing problem than we do satisfying them (LHC)."

OMC Proposed Changes

Thompson then outlined to the board changes OMC has identified which could bring in at least $750,000 a year in savings or new revenue. "We've been doing our due diligence over the almost two months now (we've managed the hospital) and we have been getting this together," Thompson said.

* OMC's Human Resource Director will soon propose ways FCH can save an estimated $210,000 by using OMC employee benefit programs. Because Medicare and Medicaid reimbursement will be involved, actual savings will be around $70,000.

* FCH needs to re-negotiate reimbursement contracts with private insurance companies. The hospital currently receives about 53% reimbursement for claims, when it should be receiving about 75%. Updating the contracts could bring in an additional $500,000 a year to the hospital.

* Thompson informed Fulton County Judge Charles Willett that the county needs to consider taking over the hospital-run ambulance service, removing a loss of about $85,000 a year from the hospital's books.

* OMC has begun reducing costs by reducing the nursing staff on occasions when there are fewer patients to care for. Thompson again commented on the need to cover the emergency room during late night and early morning hours by having a doctor on call who can quickly get to the hospital when needed. The change would produce savings of at least $130,000 a year.

* Reducing bad debt from uninsured patients who do not pay their bills remains one of the hospital's top priorities. Thompson noted the hospital is experiencing an increase in "self pay" patients, and policy changes are needed to reduce providing treatment that will not be paid for. Thompson explained how many hospitals now have a doctor assess uninsured people who seek emergency room treatment. Those who do not require immediate emergency room treatment will be asked for payment up front or given options, such as seeing their primary care physician or going to a clinic, or applying for Medicaid or Medicare assistance.

* OMC wants the hospital to do a better job of quickly billing self-pay patients, and making follow up contacts to ensure they are aware of their bills and making arrangements to pay on them.

The hospital should step up efforts, through collection companies, to collect on bad debt. The hospital is currently owed an estimated $800,000 in treatment that has not been paid for.

"So, these are the things that would be looked at to make an improvement (in the bottom line)," Thompson said.

"We don't have a lot of time...that home health license is just not going to go that far. Once we pay these notes down, and once we pay our accounts payable of almost $400,000, that $1.7 million is getting eaten into very rapidly. So, we're going to have to make some hard decisions and see what we can glean out of this."

Board members pointed out that a county take-over of the ambulance service has been pursued before, unsuccessfully.

Members indicated they knew uninsured patients using emergency rooms for primary care is a growing, national problem, and agreed steps may need to be taken to reduce the number of patients treated in the emergency room, who do not require emergency services.

"It looks like, to me, you have us, at least, pointed in the right direction," said Perryman, of OMC's early work to find ways to reduce spending and bring more revenue into the hospital.

The next hospital board meeting will be at 6 p.m. on Jan. 23. Meetings are held in the hospital conference room and the public is invited to attend.

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Wowee--good article.

-- Posted by conventional1 on Thu, Dec 29, 2011, at 9:14 AM

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