The Cook County North Shore Hospital & Care Center board is carefully considering where to set its 2014 levy. With year-todate revenue being considerably less than expected and a remodeling plan in the works, the effect of hospital finances on the community was part of the equation as the board discussed the budget at its November 21, 2013 meeting.
Hospital Administrator Kimber Wraalstad reported that the hospital had “multiple days” in October with no patients. A minimal amount of staff must be maintained, however, in order to be ready for patients at all times.
The hospital was expected to have an operating income of $137,130 not counting this year’s levy by the end of October, but it actually had a loss of $533,571. With the tax levy, however, net income was at $207,239.
Accounting Clerk Kelly Swearingen said there is no way to forecast injuries and illnesses. In creating the budget, Wraalstad said, they average trends from recent years to guess what might be needed in the next year’s budget. “We try to use reasonable estimates,” she said.
Some services are provided as a result of elective surgeries, such as hip and knee replacements, Wraalstad said, and other services are dependent on tourism and activity at the ski hill. The hospital gets more revenue when people have heart attacks early in the year, she said, because many of those who have them later in the year do their cardiac rehabilitation in warmer places where they go for the winter. Another factor is the cost of utilities, which varies according to the weather.
Computer costs will have a separate line item in the budget as of 2014. Emergency room doctors are the hospital’s biggest expense, Wraalstad said, at over $100 an hour 24 hours a day. Because the hospital is in great need of EMTs, next year’s budget includes training dollars for new EMTs.
Not including any levy next year, the proposed budget is projected to have a loss of at least $384,000. Cutting expenses does not necessarily improve the bottom line because Medicare reimburses the hospital according to its expenses. Wraalstad said if the hospital agreed to the new reimbursement system Blue Cross Blue Shield wants to implement, the hospital would lose another $300,000.
“We really need to increase the revenue,” said St. Luke’s President John Strange. St. Luke’s is North Shore Hospital’s administrative partner. He said he is concerned that with rollout of the Affordable Care Act, many people will have deductibles so high they will not be able to pay them, leaving hospitals with more bad debt than they currently have.
Operating at a loss is not good business practice, Wraalstad said. They could increase revenue by adding services, such as chemotherapy or renovating the hospital and care center to attract more patients who would otherwise seek services elsewhere.
Board member Tom Spence suggested that they keep the levy down, especially since they are looking at a large remodeling project. Wraalstad said they could, but it could put the facility at risk if their numbers are lower than expected. As they seek funding for remodeling, she said, potential lenders will expect debt to be paid through levy dollars.
“We’re saddled with a business that is unprofitable, and if I were a businessman I wouldn’t invest in it,” said board member Howard Abrahamson. “This kind of service isn’t profitable in this location.”
Blue Cross Blue Shield contract
The hospital’s status as a Blue Cross Blue Shield of Minnesota provider as of January 1, 2014 continues to be uncertain. Administrator Wraalstad has been negotiating with Blue Cross. She told the board Blue Cross is asking for a four-year agreement with continued payment reductions. She said she is unwilling to accept language that would give Blue Cross a safety net by allowing it to change its payment rates at any time. The company is not willing to continue the current contract until they reach an agreement, she said.
“We’re still dancing with them, too,” said John Strange.
“I still think there’s a good chance we’ll be able to get this to go,” Wraalstad said.
Lifelink III, the hospital’s helicopter service, is not a Blue Cross provider. For patients with Blue Cross insurance, it is an out-ofnetwork service.
Although hospitals cannot discuss or compare their rates with each other, Wraalstad said that she has spoken up about the issue at numerous meetings. She said, “I feel like I’ve become an insurance counselor.”
Hospital employees will continue being covered under Blue Cross in 2014 because a decision had to be made regarding their coverage even though negotiations are still under way regarding whether the hospital will continue to be a Blue Cross provider. The premium will increase 13.9 percent.
Facility remodeling
Eleven architectural/ engineering firms sent proposals for remodeling the hospital and care center. Administrator Wraalstad said she worked with several staff members to narrow the field down to four. She is assembling a group comprised of two board members and several staff including one doctor to tour eight facilities representing the work of the four firms. Interviews planned for the middle of December will narrow the field to two candidates that the board will interview in January.
Affordable Care Act
Board member Abrahamson said he went to a meeting where they were told Minnesota is set up well to comply with the requirements of the federal Affordable Care Act.
Administrator Wraalstad said they are being told Centers for Medicare & Medicaid Services (CMS) will only pay critical access hospitals for up to four days of hospitalization. After that, they are supposed to transfer or discharge patients or render services without continued payment by CMS.
Leave a Reply