Hospital district to ask voters for .5 cent sales tax

The Iron County Medical Center needs help, said its chief administrator and will be asking voters in April to approve a 1/2 cent sales tax.

Joshua Gilmore, ICMC’s chief executive officer, made the case for such a move in several town hall meetings recently, where he outlined the financial condition of the institution.

Gilmore reiterated the situation in no uncertain terms in an interview Friday, January 20, at the hospital.

“We assured the community that we would not go for the increase unless we had to,” he said. “We were holding off to see if all the changes we were making operationally would be able to make this sustainable without having to ask for more taxation. But what we have found is that we must do this. We are not able to get to that point given our situation.

“It is imperative to have this tax passed to help us be viable.

“And even with the passage of the sales tax, I cannot promise that we are going to make it. But without it there isn’t a chance.”

If voters approve the measure, the tax would generate an estimated $300,000 to $400,000 annual for the hospital. Gilmore said the institution must do much more than that.

“Last year, we lost $1.6 million, but we have continued to work on making that better,” he said. “The shortfall this fiscal year to date is right around $430,000, so we are losing around $70,000 per month.

As of last month, the hospital is approximately $7.6 million in debt.

That debt was there when Gilmore came onboard some 11 months ago. Much of it is an amount owed to Medicare since the hospital was reimbursed too much for Medicare costs.

The arcane world of hospital finance is one where goverment programs like Medicare tell the institution what its costs are and what it will be reimbursed; where insurance companies and the hospital leadership meet every three years to hash out what kind of percentage the insurance companies will be paying on the hospital’s actual costs, where a critical-access unit like ICMC cannot refuse treatment to anyone who requests it regardless of their ability to pay.

“We need to get rid of the Medicare debt – it is just dragging us down,” Gilmore said. “We need to play catch up on our accounts payable – we are significantly behind in that.

“I believe we can get to the break-even point in 6 to 12 months. The problem is that even if we get there it doesn’t resolve our accounts payable, doesn’t resolve the Medicare debt. So, just getting to break-even isn’t good enough.”

It isn’t as though they haven’t tried to restructure that debt through Medicare, (actually, they asked them to forgive the debt) but the representatives they met with refused to budge.

“Part of our problem is that the private insurance companies, notably Anthem Blue Cross haven’t renegotiated our contract as requested,” explained the CEO. “They have given us increases in 2017 that amounted to 15 percent over what they had been paying. Even with that increase, we are substantially below what Medicare says our costs are. In order to be sustainable, we have to get at least what Medicare would give us plus a margin on top of that so we have room for growth and things like adding and replacing new equipment.”

Iron County Medical Center employs approximately 100 full-time employees. The institution’s impact on the local economy is estimated at $5 million to $6 million annually.

If it suddenly ceased to exist, some - perhaps most - of those professional employees would be forced to seek employment elsewhere. Such a scenario would have a devastating effect on the region.

As it is, the staffing levels at ICMC are at “bare minimum levels,” with a hiring freeze on all non-essential positions.

In the past 11 months the staff has spent a considerable amount of time doing what the CEO calls “rebuilding our revenue cycle.”

They’ve brought in outside experts in accounts receivable and began a new way of charging and tracking services. They brought in an industry expert to look over cost reports.

“We found almost $200,000 over last year (by doing so),” Gilmore said.

He added that they have cut every ounce of fat from the budget they could find, even to the point of raising prices in the hospital cafeteria.

He also noted that while asking for the tax increase, there are still things they are planning to try to narrow the difference between what revenue they can generate and the “break even point.”

“We are just about to become part of the 340B program – a federal program that allows for special pricing of medications for critical-access hospitals,” he said.

The 340B program was established by Congress in 1992 and was signed into law by President George Bush. It allows more than 2,100 nonprofit health care providers serving low-income and uninsured populations to buy outpatient prescription drugs at a discount. Under 340B, pharmaceutical manufacturers who choose to participate in Medicaid agree to provide outpatient drugs to this select group of nonprofit health care providers at reduced prices.

Gilmore said the work will begin with Parkland Pharmacy, and “paperwork is being filed” for Walgreens to particpate. He also hopes to include CVS pharmacy in the endeavor.

“Even though patients with insurance will not see a change in their medication charges, there is a margin that comes back to the Iron County Hospital District,” he explained. “For patients with no insurance, they also get a discount on medications so it is a win-win for the community.”

According to a non-profit organization called 340B Matters the future of the program is uncertain due to the political climate in Washington, D.C. and it is fighting to retain current levels of funding. As far as to the program’s inpact: “Compared to non-340B hospitals, 340B facilities treat 64 percent more Medicaid and low-income Medicare patients, and 48 percent more low-income Medicare patients who are eligible for Medicaid than non-340B hospitals. They also treat 65 percent more low-income Medicare cancer drug patients who are dually eligible for Medicaid than are served by non-340B hospitals.

“This program is a relatively small component of the health care system – but it is a critical component because it serves such needy populations. In 2015, the 340B Drug Discount Program accounted for only 2.8 percent of the $457 billion in annual drug purchases made in the United States. During that same year, thanks in large part to the program, 340B hospitals provided $23.8 billion in uncompensated care. Significantly, during 2015, one out of every four 340B hospitals had a negative operating margin.”

Gilmore echoed that sentiment regarding changes at the state and federal level: “We have not seen increases in reimbursement,” he said. “In general it amounts to finding new ways to cut what they cover.”

Another change being given serious consideration is bringing the rural clinic back under the roof of the hospital.

“Moving it back and incorporating our specialists into the rural health clinic could ultimately increase our reimbursement,” Gilmore said.

And the hospital was recently awarded a special grant through the Delta Regional Authority to provide access to technical expertise as no cost to the institution.

“We need the sales tax,” he reiterated. “And as a hospital district we need to figure out what to do with that debt. We won’t be sustainable with the debt. Right now our interest expense on that debt is between $80,000-$90,000 per month and it is just sucking the lifeblood out of the organization.”