Thu Sep 09 2010
By DARLENE PRINCE
A double whammy consisting of a serious economic downturn and a proposed 1.27 percent tax on hospitals' operating costs has put Ohio medical centers in a financial squeeze.
Hospitals have responded to current economic ills by instituting hiring freezes, laying off
employees and halting construction projects. Now they may have to deal with a 1.27 percent franchise tax on operating costs for the next two years, as proposed in Gov. Ted Strickland's 2010-11 budget now under review by state lawmakers.
According to the Ohio Hospital Association, about 35 percent of Ohio hospitals have already laid off employees or will do so in the next six months. The franchise tax is estimated to cost Ohio hospitals about $600 million with about $187 million returned to them over 18 months.
In five area counties, some hospitals are cutting people and construction while others are only spending dollars that are absolutely necessary. Some hospitals are facing even more grim decisions about their future.
At Community Hospitals and Wellness Centers, Bryan, CEO Phil Ennen said the Williams County hospital has implemented cost-cutting measures.
"We have already had a reduction of about 40 positions," Ennen said. "The reduction was from a cross section of the hospital employees. It didn't take place in just one or two departments.
"Our charity cases are up 30 percent," he said. "Some people in mid-2008 who had a job and health insurance lost part of it -- either their job or their insurance. It looks like more people in commercial insurance can't pay their bills. Some of these people may be moving to Medicaid or Medicare, but that doesn't happen right away. It takes a while for those papers to go through the system.
"As for the franchise fee proposed by the state government, it is not helpful to the hospitals," he said. "When you send a dollar to the state and you don't get a dollar back, it is not a good situation.
"I do have sympathy for the state with their budget problems," he continued. "We have talked to Rep. (Bruce) Goodwin and Sen. Steve Buehrer about the proposal. They are all under tremendous pressure to solve the budget problem."
In Defiance County, Mercy Hospital of Defiance administrator William Sutton said, "Our volumes remain strong, and our plans are to maintain our current level of staffing and to hire as needed." There are 155 employees at Mercy Hospital.
"We are monitoring our financial situation closely, and we are seeing some effects from the economic downturn, specifically more patients who have lost their health insurance. We have seen a significant increase in the number of self-paying patients -- those without health insurance or other assistance. Due to underinsured and uninsured, we have seen increases in our contractual allowance and bad debt.
"On the positive side," Sutton explained, "our staff is actively engaged in lean management projects that improve efficiency and cut costs while at the same time improving service to our patients. These are challenging times, and we are committed to maintaining the highest standards of care for our patients and being fiscally prudent in order to maintain jobs and benefits for our employees.
"We think that the governor's plan to charge hospitals the Medicaid-related fee is a good way to leverage federal funds for Ohio," he said. "But we believe that for every dollar we give, we should receive a dollar in return. We understand that the governor's plan is to return to us about 40 cents for every dollar. Balancing the state budget on the backs of Ohio hospitals is not a good idea."
At Community Memorial Hospital (CMH) in Hicksville, hospital CEO Mel Fahs said, "Fortunately, Community Memorial Hospital has not experienced a downturn in patient volumes, like many other facilities. We have no immediate plans to downsize our work force. Our team is very good about utilizing 'cut time' during slow periods and reducing the use of overtime.
"We are operating in a defensive mode," he said. "We've put off renovation projects and delayed non-essential purchases. We're watching the bottom line very carefully."
Regarding the governor's "tax" on hospitals, the situation is much more serious.
"CMH has estimated that this would cost us over $200,000 a year," Fahs said. "CMH is a nonprofit, critical-access hospital; a move like this would make it very difficult, if not impossible for us to continue to provide our current services."
Paulding County Hospital CEO Gary Adkins said, "We have not cut staff with layoffs. We looked at all of our expenses and have had hiring freezes in certain positions when possible. We have delayed several renovation projects including an update on the ER room and on the medical surgical floor.
"Last time the state cut funding, we had to eliminate the OB program," he continued. "We don't like to cut programs. We employ about 220 people and are next to one of the largest employers in the county.
"We have had increased charity care and bad debt expenses," he said. "As we headed into the fall budget (last year), we anticipated that we would have to manage a significant increase in that area. The fact that many unemployed people have lost their health insurance after losing their jobs has clearly played a large role. In our county, unemployment went from 4 to 13 percent."
As for the governor's proposed franchise fee, Adkins said the state will collect the hospital fees, then go to the federal government and the state will be given matching funds.
"They plan to increase outpatient Medicare by 5 percent, but that increase will not offset the franchise fee. The state will collect $600 million and will give about $200 million back. That leaves them with $400 million.
"We will be OK, but many hospitals are on the edge and they will not make it," he contended. "This was supposed to be a stimulus plan but it is really an anti-stimulus plan. Now is the time to contact the governor's office about the plan.
"The assessment for us is more money than we even make so it would put us in the red," Adkins added.
At Defiance Regional Medical Center (DRMC), Ron Waschman, senior vice president of managed care reimbursement for ProMedica Health System, said, "We have seen an impact from the (downturn in the) economy on all of our ProMedica hospitals including Defiance." He noted the hospital is seeing more charity cases and is also being affected by unemployed people who have lost their health insurance and have gone to Medicaid for health care.
"We are also affected by those people who now have higher co-pays on their insurance.
"The governor's tax of 1.27 percent on hospitals will have a very significant effect on our hospitals and clearly the one in Defiance," Waschman said.
"Defiance will lose $900,000 (in the tax)," he said. "The hospital will get back $300,000 but will then lose $600,000 over two years. Our president, Alan Brass, sent a letter to the governor and we have been in touch with state legislators. We need to keep those dollars in health care."
"In the current economic climate, we are holding back on capital projects," said DRMC president Gary Cates. "We are only replacing critical essentials such as if something breaks and has to be replaced. We are definitely holding back on discretionary spending.
"We are fortunate in that we have a newer building, a nice facility that was built in 2002. As far as staff, we have to look at our mission, which is to provide high-quality health care for the community. We will not be making any reductions in staff. We employ about 340 people.
"One of the reasons we are in a better position is that we are part of a larger system, ProMedica," he said, adding that the leadership is prudent and that he works with the sister hospitals to cut costs.
Michelle Rychener, the COO of Henry County Hospital, said, "For staffing, we have been trying for several years to reduce or reorganize positions when employees left. We feel we are in a good place when it comes to staffing now. As for construction projects, we finished construction last summer on our project.
"We anticipated insurance plan changes, especially the high deductibles that are here right now," she said. "There has been an increase in charity cases. We are watching this carefully.
"As for the governor's plan, we have run some preliminary numbers and it will have a significant amount of funds for the hospital." She declined to release any figures, but said hospital officials will be watching the situation.
Officials at the Fulton County Health Center in Wauseon have seen some reductions in the number of patients, said Steve McCoy, spokesman for the facility.
"We believe the slowdown is due primarily to patients with elective or discretionary surgery holding off," he said. He said the reduction was lower in January and February than it has been in March and April.
"We have done several things to cut costs including a hiring freeze except in relation to patient care," he said. "There have been no layoffs, but some positions were not filled due to attrition."
As for the franchise tax on hospitals, McCoy expressed the same frustration that other hospital personnel have stated. He noted that the state will take about $600 million from the hospitals and only return $187 million, thus forcing some hospitals to possibly increase charges to their private insurance customers.
Comments
By Posting to this site, you agree to our Terms of Service Be polite.
Inappropriate posts may be removed.
Crescent-News.com doesn't necessarily condone the comments here, nor does it review every post.
Login above or Register to comment.
0 Total Comments Home | Back
Copyright Defiance Publishing, LLC 1995-2010. All Rights Reserved.
Content may not be republished without the expresse written consent of the publisher.
Content may not be republished without the expresse written consent of the publisher.
Dix Communications