Hospital challenges lie ahead

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November 21, 2014 - 12:00 AM

Insurance available through the Affordable Care Act has made no appreciable difference in revenue flowing to Allen County Regional Hospital, Ron Baker, its chief executive officer, told Iola Rotarians Thursday.
The hospital’s rate of charges billed that went unpaid was 14 percent before ACA was instituted; still is.
“ACA insurance has made a (positive) difference in urban hospitals but not in rural ones,” Baker said.
The refusal of Kansas to accept increased Medicaid funding on the federal government’s nickel is another story, and in itself some validation of ACA’s value to poor Kansans.
“It’s like having your eye poked with a sharp stick,” Baker said of the state’s decision to refuse the additional Medicaid funding. Gov. Sam Brownback has refused to OK the expansion and legislators have followed his lead.
Baker allowed there was no way of knowing how much of a difference the additional funding would have made to the hospital’s debt. By law it must accept patients whether they can pay for treatment or not.
Baker said the current funding climate sets the stage for the “next five years being the most tumultuous” for the nation’s hospitals.

BAKER GAVE a brief overview of how the local hospital got to where it is today.
The old St. John’s Hospital, a Catholic institution a mile east of Iola, was replaced by Allen County Hospital in 1952 at the intersection of Madison and First streets. The structure, which cost $618,000 to construct, contained 42 beds.
Internal changes increased bed numbers to 65 by the 1970s, when admissions were at the whim of physicians who didn’t have the oversight that has come with Medicare and private insurance. There were times, Baker said, when inpatient numbers exceeded 70, with some treated from beds set up halls.
In 1982, after efforts to pass a bond issue to build anew failed, the hospital was leased to Research Medical Center, which led into management by Health Midwest. Hospital Corporation of America took the reins in 2003.
ACH became a critical access hospital in 2005, with financial advantage of Medicare reimbursement being cost plus 1 percent.
The new hospital was an outgrowth of 2010 being designated the “Year of the Hospital” by Allen County commissioners and Iola’s governing body. The $30 million facility was approved on the strength of a half-cent countywide sales tax, concessions by Iola on its sales tax collections and Medicare reimbursement.
Allen County took control of the hospital, which opened in December 2013, although Baker and some others in management continue to work under contract with HCA.
Though outside its budget, ACRH took on Via Christi’s clinic on South Washington, when the Wichita-based health group decided to divest itself of the clinic. Finances have not been impaired, Baker said, with the clinic being well-established and a high-volume provider.
A significant step for the hospital was when its medical records became fully electronic on Jan. 14 of this year, overall a $2.5 million investment, Baker said.

ACRH is one of 1,330 critical access hospitals in the nation, designation of which “gives us a fighting chance” to weather financial storms, Baker said, because of the cost-plus Medicare reimbursement.
Some full-service hospitals, which depend on diagnosis-related billing rather than cost, have faced challenges of late, Baker said.
Less than 20 percent of hospital care, either inpatient or out, is at critical access institutions, however, and while they consume about 5 percent of Medicare reimbursements, the cost-plus basis is an advantage — most of the time.
The rub comes with a patient being responsible for 20 percent of co-pays. If the patient has supplemental insurance, that usually fills the gap.
“If they don’t and don’t pay, there’s not much we can do,” Baker said, which accounts for the lion’s share of the hospital 14 percent uncollected debt. And, that’s where the federal Medicaid revenue would have been an advantage.

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