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Jan. 11, 2001 By Jim Mimiaga
After years of battling out-of-control accounts receivable, Southwest Memorial Hospital is finally seeing some relief. But the financial prospects for rural hospitals in general are not looking healthy across the state. Chief Financial Officer George Brisson reported Tuesday that cash flow at the struggling acute-care facility was up $1.6 million this month, reducing the amount of outstanding accounts to a total of nearly $13 million. He credited stepped-up efforts by hospital finance officers who have been fighting for fairer reimbursement rates for medical services covered by Medicare and Medicaid, both government payers. "It’s been a real struggle, but our efforts are paying off now in one big lump," Brisson said. By comparison, Mercy Medical Center in Durango reported $30 million in 1999 in uncollected bills for patient services rendered. Rural hospitals are at a distinct disadvantage because they lack patient volume enjoyed by larger hospitals. When the federal government cut reimbursement in 1997 as part of the Balanced Budget Act, larger hospitals managed to adjust, but rural facilities with fewer patients have really suffered, Brisson said. "From what we’re hearing, the industry is beginning to get some relief from those payments cut because of that legislation," Brisson said, during an interview Monday. "Still, it’s not enough to cover the costs of procedures we do." Southwest has a better record than most, recouping 88 percent of its cost from the Medicare program and 81 percent from Medicaid in 1999, according to the latest data compiled by the Colorado Hospital Association. The state average is 79 percent. Peg O’Keefe, vice president of public affairs for the CHA, said that the relief legislation Brisson mentioned from the BBA will be marginal, and warned that more cuts are looming for rural hospitals, essentially offsetting any benefits. When the Balanced Budget Act went through, Colorado hospitals suffered $1 billion in cuts from government payers, she said. This year, those cuts will be at $900 million over the next three years thanks to the Benefit Improvement and Payment Act passed at the end of 2000. But the bigger hit rural hospitals face will come later this year, when $19 million is cut from state’s Health Care Policy and Financing Department budget, which covers outpatient-care reimbursements under Medicaid, a joint federal and state program for low-income people. "This is a real concern for rural hospitals because a lot of business nowadays is in outpatient care," O’Keefe said. "We will be studying the cut’s effects." Southwest gets more than 50 percent of its business from outpatient-care procedures that do not require an overnight stay. On average Colorado hospitals bring in 63 percent of their revenue from patients staying at least one night. Rural areas like Montezuma County are also typically poorer than urban areas, which leads to high charity-care write-offs for Southwest. CHA’s data shows Southwest’s uncompensated-care rate at 9.1 percent, or $3 million, for 1999. Of all 66 hospitals, only six recorded higher charity-care write-offs in Colorado. The state average was 6.2 percent. When added together, charity care and government shortfalls on reimbursements represent 32 percent of total charges at Southwest. The loss-category figure is the 11th highest of all Colorado hospitals. Socially, studies show there is a tendency for older rural residents to harbor attitudes that taking government assistance for medical needs is shameful, even though it is their federal tax dollars ultimately paying for the cost. To debunk that impression, Southwest has been searching out patients who qualify for Medicaid, but have refused to sign up. Brisson said the program has been successful in signing up more of those meeting the income requirements, rather than leaving Southwest stuck paying for an unnecessary bill. "We hired an outside contractor to take that on, and it has been worth it. We’re seeing that utilization going up," Brisson said. Diversifying services is one of Southwest’s goals. In addition to a variety of emergency and surgery services, physical- and occupational-therapy departments, labs and a pharmacy, the 61-bed facility also provides home health care, has started a new sleep lab, and plans to expand same-day surgery operations to accommodate the trend towards outpatient care. Still, without legislation to ease the burden of state and national budget cuts, the financial future for hospitals will continue to be marginal. "We are saying that hospitals cannot sustain those kinds of state budget cuts targeting health care and continue to survive," O’Keefe said. "It is really unreasonable because (the federal and state governments) are already paying less than it costs to provide these care services. And it will just get worse." Southwest Memorial is one of 19 Colorado hospitals that lost money in 1999, due in no small part to inadequate reimbursement rates from government payers. The pinch hurts, and threatens future viability for the 51 of the 61 reporting hospitals in the state, including Southwest, that reported patient revenues of less than 6 percent. That profit margin is required, national experts say, in order to maintain and update physical structures, purchase new technology, provide new programs and services, reduce outstanding debt and invest in the health-care needs of the community.
Other facts revealed by the recent CHA report and others:
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