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Friday, Apr. 29, 2016

It's hard to win in the hospital business

Thursday, January 9, 2014

Despite a good six months of financial reports, the Fulton County Hospital owes Medicaid $353,000, after receiving too much reimbursement for patient claims. That hurt is eased bit since a cost report also shows Medicaid owes the hospital $209,000 after under-reimbursement for claims. [Order this photo]
Richard IRBY


After six months of profits or small losses and after paying off most of its bills, you could say the Fulton County Hospital has been on a roll. But the Dec. 23 meeting of the hospital's Board of Governors may have left some members feeling that they just can't win. The latest cost report shows the hospital owes Medicare $353,000, partly because it has recently done so well financially.

Medicare Cost Report

Bill Couch, the Medicare expert for Hughes, Welch and Milligan CPAs, presented the latest cost reports, showing whether the hospital was owed money from Medicare and Medicaid, or whether it owed them after months of submitting bills and receiving reimbursements.

Couch noted that the hospital had admitted 4,505 patients over 2013 -- 449 more than last year. "That is a pretty good increase, 10 percent, because a lot of hospitals I go to -- critical access, small hospitals -- their inpatient volume is dropping," Couch said. He added it is also good that hospital costs have dropped or remained steady. Good to a point.

"When we have the good fortune to have an increase in [patient] volume and our costs are staying the same or decreasing, what we are doing is being overpaid by Medicare," Couch explained. When a hospital's patient total is low, Medicare pays a higher reimbursement, as it did in 2012. Since the hospital has done better financially in 2013, its reimbursement should be lowered, but Medicare's recent payments have still been based on 2012's performance.

"I prepared the cost report and, at the end of the day, we owed Medicare $353,000. That caused me great alarm," Couch reported. In checking further, he found that the ambulance service, for example, is being reimbursed 74-cents on the dollar, when it should have been 38-cents. "For Medicare, we billed $575,000 in charges to them and they paid us $209,000 more than what they should have, based on what our costs were." The same was true for inpatient reimbursements. Since the hospital was treating more patients, the reimbursement rate should have been lowered.

Couch was able to sign the hospital up for an extended payment plan, giving it a year to pay back the $353,000, by making monthly payments.

On the Medicaid side, the news is much better. When the hospital filed claims with Medicaid, it paid a much smaller reimbursement rate -- meaning it now owes the hospital $204,000 to settle up. If it chooses, the hospital board can pay the $204,000 to Medicare, reducing what it owes to $149,000.

Board member Jerry Blevins asked what can be done to lower the amount of Medicare reimbursement, to avoid owing it a large sum on future cost reports.

Couch said the hospital should look at its expected income for the rest of the fiscal year, which ends on June 30, and decide how much it would like Medicare to withhold from future reimbursements. He added a caution however: "But when we do that [ask for less reimbursement], our cash flow dries up. It's going to put some pressure on us, so we don't want to be too severe with that."

November Financial Report

The November financial report showed a $23,000 loss for the month, but the hospital has a net income of $186,000 for the year. The November average daily census of 6.8 inpatients and 7.1 patients in the swing bed unit were strong numbers. Accounts payable, the amount owed vendors, had been cut to $178,000, and the hospital had an average of 23 days cash on hand.

Board chairman John Ed Welch said the way out of Medicare and Medicaid reimbursement problems is to create other sources of revenue. "Sales tax revenue, the Wound Care clinic, get more doctors in the clinic out there, so we can generate some additional revenue we can keep," Welch said.

Later in the meeting, Administrator Charles Willett announced that two physicians who are affiliated with the White River Medical Center plan to begin a regular orthopedic clinic, treating bone, joint and muscle ailments, in the clinic building at the hospital. Dr. Jeff Angel and Dr. Dylan Carpenter's first day was on Dec. 14, and Chief of Staff Griffin Arnold said Salem physicians would start making referrals to them. "I know Dr. Angel has been in the area for 15 years, himself. Part of this is getting Dr. Carpenter's name out. This will be good for us, just to get another specialist in our area," Arnold said.

Willett said the Wound Care clinic which operates on Fridays in the clinic building continues to see about five patients a day, but recent weather problems and the holidays have set back efforts to increase business. Willett added another physician has contacted him about opening a practice in the clinic, but nothing has been worked out as yet.

One alarming figure in the financial report showed $1.4 million owed in Accounts Payable, but Welch quickly confirmed from Chief Financial Officer Denice Innis that most of the accounts payable debt was owed to Healthland, the company that installed and maintains the new electronic medical record system. Administrative assistant Jennifer Perryman reported that the records submitted to Medicare to show the electronic system is up and running and being used properly have progressed through the bureaucracy. The hospital's request to be reimbursed for most of the $1 million dollar cost is on payment lock status, meaning the hospital should receive payment by the end of January or some time in February. When it is received, Healthland will receive a large payment, and the hospital will begin making payments, if a balance remains.

Patient Discount


In new business, Willett proposed sending a letter to former patients who owe bills informing them they can qualify for a big discount from January through March. "If it's alright with the hospital, we would like to offer everybody a 40 percent discount on their self-pay [bills], co-insurance or deductibles. It will be for anybody that has a bill here. It might help us collect some money," Willett said, particularly self-pay patients, patients who did not have insurance or other financial assistance when they required treatment. Board member Charles Owens suggested that by extending the discount through April, some former patients might use their income tax return money to take advantage of the discount and pay their bills. The board unanimously approved the January through April discount program.

Sharp Hospital


The meeting ended with Welch discussing Sharp County's plan to hold a special election to raise its sales tax to help pay for a new hospital. "I sympathize with anyone who wants a hospital. I do have a concern that it will cannibalize us, hurt us, if it goes in. It's hard for me to see how they can survive. They are going in as an Acute Care PSS hospital competing with St. Bernards, Ozarks Medical Center and White River Medical. I don't see where they have the doctors [to staff a hospital]." Welch said. He added that, as he understood it, St. Bernards in Jonesboro paid for the feasibility study that was conducted, but had not disclosed what assumptions it used to determine a Sharp County Hospital was feasible. "I can make anything feasible with the right assumptions," Welch said.

Board member Dr. Jim Bozeman speculated the assumption was a new hospital will be feasible "if we close," and they can take the local hospital's license as a Critical Access Hospital.

Welch said Sharp County would be better off to allow the White River Medical System to open its planned 24 hour emergency room at its medical complex in Highland, before raising taxes and building a hospital that may not survive.

The next meeting of the Fulton County Hospital Board of Governors is scheduled for Monday, Jan. 27 at 6 p.m. Meetings are held in the hospital's conference room and are open to the public.

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