Bad debt spoils a great year for healthcare system
By Neal A. Shipman
One would think that with the population of Watford City and McKenzie County exploding, due to a huge influx of oilfield-related workers, that the McKenzie County Healthcare Systems would have seen a very profitable year.
But in spite of seeing a record number of patients in the clinic, the emergency room and in the hospital, the healthcare system is struggling financially.
That was the grim news that Dan Kelly, CEO of the McKenzie County Healthcare Systems, shared during the system’s annual meeting on Monday, Nov. 28.
“We are seeing our visits to the emergency room and clinic grow as our population increases,” stated Kelly. “Unfortunately, we are also seeing our bad debts increase because of this increase in usage.”
According to Kelly, for the 2010-11 fiscal year, which ended June 30, 2011, the healthcare system had 2,561 emergency room visits, an increase of 656 visits from the prior year.
According to Kelly, the number of patients being seen is also steadily increasing.
In the last fiscal year, the clinic saw 9,103 patients, which is an increase of 991 patients over the prior year.
In order to meet the growing demand, the healthcare system hired Brian Cooper as a physician’s assistant and is now staffing the emergency room with one full-time medical provider on a full-time basis.
And the number of visits to the emergency room and clinic are still going up.
“Since July, the emergency room has been averaging over 360 patients a month,” stated Kelly. “During October, we saw 414 patients in our ER.”
Likewise, the clinic, which is staffed with three providers, is seeing more and more patients. Since July the clinic has averaged 856 patients per month with providers seeing 990 patients in the month of September alone.
“We’re extremely busy both at the clinic and in the emergency room,” stated Gary Ramage, chief of medical staff. “We are averaging one motor vehicle accident every other day, three oilfield traumas a day and one death per week. In fact, in one stretch, we had 11 deaths in 17 days.”
While those numbers should mean that the healthcare system is doing well financially, that isn’t the case. The system’s bad debt expense over the past year has increased from $300,151 to $659,284.
“The bad debt is wiping out all of our profits,” stated Kelly. “As a facility, we ended the year with just a $65,196 profit.”
And that bad debt has Kelly gravely concerned.
“We’re seeing a completely different demographic when it comes to our patients,” stated Kelly. “Four years ago, we saw local people who would try to pay their bills to the healthcare system. Today, we have people giving us bad information, bad addresses and people who really have no intention of paying the bill for the services that they receive. Times have changed and we may get to the point where we may have to ask for prepayment.”
While Kelly reported that the healthcare system is working to develop a system that requires patients to pay their bills prior to receiving service at the clinic, that option is not practical in the emergency room where the hospital must assess and stabilize patients with medical conditions.
“Literally, we as a healthcare system must get a handle on the bad debt expense,” stated Kelly. “Unless we do, this area could be the demise of the system.”
While growing bad debt is hampering the system’s ability to show a profit, according to Kelly, so is the reimbursement levels that are paid by Blue Cross/Blue Shield and Medicare.
“Our reimbursement level from Blue Cross/Blue Shield is very poor,” stated Kelly. “But our reimbursement from Medicare is even worse. North Dakota has the second lowest reimbursement from Medicare while providing some of the highest quality of healthcare in the nation.”
And McKenzie County Healthcare Systems’ issue with reimbursement rates is not unique. Of the 36 critical access hospitals in North Dakota, 18 lost money last year; and 11 hospitals lost money in the last four years.
“It is difficult for hospitals to make money in North Dakota,” stated Kelly. “We are fighting to get fairness in reimbursement at the national level.”
And for those hospitals that are trying to make ends meet in the oilpatch region of the state, Kelly predicts things are going to get tougher, especially when it comes to recruiting and retaining employees.
“It’s becoming more and more difficult to recruit staff,” states Kelly. “We’re (local businesses) all competing against the oilfield when it comes to hiring employees and being able to pay them competitive wages.”
But for Kelly and the healthcare system, recruiting and retaining employees is more difficult when the facility isn’t making a profit.
“Unlike other businesses, our revenues are set by Medicare and insurance companies,” states Kelly. “We can’t just raise fees to cover increased salary costs.”
Yet in spite of the financial issues, Kelly is very upbeat about the healthcare system and the direction it is headed.
“We are in the process of building a new wellness center and are looking at the possibility of renovating the nursing home and building a new hospital and clinic in the near future,” stated Kelly.
In addition, in the past year the healthcare system has implemented eEmergency and ePharmacy programs and purchased a 32-slice CT scanner.
In the upcoming year, Kelly hopes to be able to recruit two additional physicians and to continue to explore options for expanding current programs, as well as offering new services that will improve the health of the citizens of the county.
“We’ve got problems ahead of us,” stated Kelly. “But this is a county that has always demonstrated that it can come together to get things done.”