The Ottumwa Courier

January 18, 2013

Hospitals worry about cuts

Real losses could be coming from the fiscal cliff

MARK NEWMAN
Courier Staff Writer

OTTUMWA — Not all of the “fiscal cliff” fixes are good — or bad. But if lawmakers aren’t careful, they’re going to hurt hospitals and their most vulnerable patients.

Ottumwa Regional Health Center CEO Phil Dionne is worried about the cuts being proposed by Congress. Some of the proposals involve cutting prices paid to hospitals on behalf of Medicare patients.

“They’ve been trying to do that for years,” he said Thursday.

ORHC gets paid whatever Medicare thinks a procedure should cost them. A new proposal looks like it will drop that by 2 percent, a loss of more than half a million dollars in Ottumwa.  

Other area hospitals would see cuts, too.

“It causes us to have to examine the services we provide,” said CEO Deb Herzog at Davis County Hospital in Bloomfield. “We have to ask if we can we be all things to all people. And the answer is probably ‘no.’ You have to weigh it out. Is this a core service?”

If it’s not, and they drop it, there are elderly people in the area who won’t or can’t travel to get that care. They may just decide to go without.

On the other hand, the 26.5 percent cut in reimbursement to doctors was halted — at least for now.

“That would have been devastating to [doctors],” said Deb Cardin, CEO of Jefferson County Hospital.

“This decrease could have led to a reluctance ... of doctors to see Medicare patients,” said Dionne.

The cost to avoid the cuts to doctors was in the billions. But it wasn’t a surprise to Dionne. For the past 10 years, Congress had avoided making that huge cut.

“It needed to be fixed, but we didn’t want them to take it from hospitals,” Cardin said.  

Her facility, which is a not-for-profit, critical-access hospital, is paid based on what a medical procedure costs — not what they charge for the procedure, but what it actually cost them. They get paid 1 percent over that.

“We say 101 percent of cost. Now we’re expecting a 2 percent cut,” she said.

That means they’ll be reimbursed 99 percent of whatever it costs to treat a Medicare patient.

Does Jefferson County Hospital have Medicare patients?

“Eight-five percent of our inpatient [patients] are Medicare,” Cardin said.

They won’t be turning patients away, she said.

“We need to grow our other business,” said Cardin. “And we need to do things better and leaner.”

“If that goes through,” said Herzog, “we’ve calculated, it’ll be $180,000 in revenue.”

Even if it cuts taxes a bit, is it fair to ask a company to do work at 1 percent less than what it costs them to do the work?

“We as citizens need to pay attention; rural hospitals need advocates,” Herzog said, “people to tell their [legislators] how important rural health care is.”

While Cardin pointed out that Ottumwa is a different type of hospital than the one in Jefferson County, she said that “they have as many reasons to be concerned.”

They’ve got to be more efficient at ORHC, too, said Dionne. But to be a good business for the community and to turn a profit, they must continue offering good service.

“We’re not cutting back on patient care,” said Suzie Wood, executive director of development at Ottumwa Regional.

Ottumwa and parent company RegionalCare have made progress on improving the hospital’s reputation, as well as allowing the place to become “a strong, viable, financially stable” business, Dionne said.

They continue to use other funds to pay for some of the improvements that are necessary: the refurbished emergency department, a new ambulance to replace one that is over 200,000 miles, even repaving the parking lot, a project which had been put on hold year after year.

But other projects may be put on hold a year or two. And employees are now under a pay freeze on raises for merit, from the newest hire all the way to the CEO.

“We’re being pragmatic,” Dionne said.

The fiscal cliff fix has put across-the-board cuts on hold for a couple months nationally. That means, Dionne said, at the end of February, the health industry is going to be fighting the same battles they fought a few weeks ago.

To pay for the rescue, the money may come from two big government expenses: health care and the military.  

“I don’t see them cutting the military,” Dionne said.

Over the next 10 years, the “Taxpayer Relief Act” reduces payments to hospitals $10.5 billion for inpatient care. Medicaid payments could be cut, too.

Cardin said hospital CEOs, whatever kind of hospital they run, are paying close attention to what Congress is doing.

“We don’t know yet what the impact is going to be,” Dionne said, adding that with the federal government, when they try to fix things, “by pulling on one string, you never know what the other end is attached to.”