February 20, 2013

Legislation could help hospitals reduce bad debt charges

By Kate Ruggles
Farmer Staff Writer

“We are in the position of needing to build at a time when we’re financially hurting.” This was a statement made by McKenzie County Healthcare Systems (MCHS) Administrator Dan Kelly at last December’s legislative forum.
According to Kelly, where the healthcare facility was ‘in the black’ before the oil boom, it is now in the throes of dealing with a significant rise in bad debt, as are many other oil-impacted hospital systems. And, yes, it is due in large part to oil.
“I arrived in McKenzie County in 2007. Early in my tenure, I was impressed by the ethics of those we serve in the community,” states Kelly. “Our patients made a concerted effort to pay their bills, and as a result, we were and continued to be a trusting organization.”
Kelly states that the boom brought a small percentage of individuals that provided incorrect information regarding their insurance coverage and/or place of address.
“Each month when bills are sent out, we have a stack returned, noting that the person is not at their given address,” states Kelly. “And we are unable to track down a current address.”
The predicament of unpaid bills for medical services provided has caused the hospital system to incur over $1 million in bad debt, in addition to dealing with staff recruitment issues, increased staffing expenses, and rising clinic and emergency room visits.
“There are times when the healthcare system can see four patients at once due to a traffic accident. The emergency room was not designed to handle that volume of patients,” states Kelly. “While the hospital is equipped to handle trauma cases, the increasing frequency with which those cases are presenting is creating a strain on our physical resources as well as our manpower.”
According to Kelly, MCHS needs a new facility, but their bad debt situation has made moving forward difficult.
“The healthcare systems board and administration have designs to build a replacement facility, so our next step is to determine how much debt service the healthcare system can assume,” states Kelly. “Given the price of a replacement facility might exceed what can be serviced by our cash flow, the healthcare system may need to look to outside entities for assistance, whether that be our county residents, the city, the county, the business community or the state.”
At December’s legislative forum, Kelly requested the District 39 representatives to change the way they see healthcare systems and to see and treat them as needed infrastructure.
Though Kelly requested them to consider providing low-interest loans for impacted healthcare systems, the State Legislature may be bringing a different solution to oil-impacted hospitals with House Bill 1433.
House Bill 1433 is proposing to send the state’s tobacco tax to the North Dakota Department of Health, and for $20 million of that money to be set aside as grants to help pay the bad debts of oil-impacted hospitals.
If the bill is passed, hospitals with bad debts that exceed 2.7 percent of their gross receipts would be eligible to receive a grant, thus helping them to catch up from the boom.
Though it is uncertain at this point whether House Bill 1433 will pass, Kelly states that MCHS has a relationship with St. Alexius in Bismarck that has helped them deal with some of their oil impacts.
“The healthcare system has leveraged its affiliation with St. Alexius to assist us in reducing the cost we pay for supplies and equipment,” states Kelly. “In addition, St. Alexius, in cooperation with MCHS, is developing an occupational medicine clinic and they are aggressively working to help us recruit physicians.”
Kelly states that given St. Alexius’ alignment with the Mayo Clinic and the significant support they have provided MCHS, the board and administration feel that their affiliation with St. Alexius is the right decision and continue to be open-minded about what this will lead to in the future.