CEO addresses hospital situation in Town Hall meetings last week

“Please get the word out that bankruptcy does not mean we are closing,” said Iron County Medical Center’s CEO Joshua Gilmore during the second of three town meetings held locally last week. Gilmore set the meetings to explain the situation at the local institution, since it had announced it was filing a Chapter 9 Bankruptcy proceeding.

“It means,” he continued, “that we are filing for protection to keep operating and that with the support of this community, we can make this work.”

Gilmore gave a broad outline of the steps the hospital had taken and need to take to a group of 60 or so citizens gathered Thursday in the Arcadia Valley High School library.

He began as he had in similar meetings by explaining where the hospital generally derives its operational revenue.

“I think that a lot of people assume we just bill Medicare and Medicaid and private insurance and that is all of our income,” Gilmore said. “The reality is that about 50 percent of our income comes from Medicare, another 25 percent comes from Medicaid, about 19 percent comes from commercial payers, and about 6 percent from self-payers.

“We also receive contributions, grants and the local government tax.”

But with the hospital’s loan debt sucking up the bulk of the available cash and unsuccessful negotiations with providers for better reinbursements, there is no way - except bankruptcy relief - to keep the doors open, or as Gilmore says it - to keep the institution sustainable.

“Right now we are asking people to support another ½ cent sales tax. The reason for that is that we don’t have sufficient income to make ends meet,” he told the crowd.

And much of it has to 

uncertain governmental funding and the private health insurance companies’ dictates on the market.

The CEO gave an explanation of how this fits together:

“The advantage of being a critical care hospital is that we are supposed to be getting paid 101 percent of costs from Medicare. The reality is that the 101 percent that comes from Medicare is subject to sequestration at the federal level, so before we get paid a dime they take 2 percent off the top.  That means on a good day we are walking away with 99 cents on the dollar for allowable charges. 

“And what are allowable charges?

“There are certain items that Medicare does not allow us to  consider as the hospital providing care; things like televisions in the patient’s room and indoor telephones.  So any costs associated with those types of items aren’t covered.  Granted that is a minor expense, but it is a cost.

“The point is that the gap between what Medicare covers and our costs is actually more than the 2 percent that we are not getting through sequestration.

“The assumption is that we will makeup that gap through what we are paid by private insurance companies like Blue Cross or United Healthcare.

“When I came aboard a year ago, we did not have sufficient contracts in place to be paid reasonably, so I began renegotiating with our major players.

“Surprisingly, United Healthcare came to the table and renegotiated a contract with us and they paid us better than they had been, but they didn’t give us what we were asking for, which we had explained was the bare minimum that we need to stay sustainable. I appreciate the fact they came to the table.

“Blue Cross did not.

“Anthem Blue Cross has given us feedback that they feel they have done enough for out hospital district and are not interested in paying us any more. They have given us increases during the calendar year 2017 and we appreciate that. But the problem is that at the end of the day when we look at what they allow compared to what we charge – they allow substantially less that what Medicare pays us. If Medicare isn’t paying us what it costs, it is a pretty simple formula.  Every time we treat a Blue Cross patient in the hospital, technically we lose a little bit of money. That is not sustainable.”

In the meantime, the institution has done a variety of cost-cutting or efficiency measures dealing with the way it charges its patients (a better way of keeping track of costs), utility grant savings, implementing a 340b Drug Discount program, renogiating a USDA facility loan, putting a 1/2 cent sales tas on the April 3 ballot and even seeking out local philanthropists and setting up a “Go Fund Me page, among other things.

“There isn’t a magic pool of dollars, but there are a handful of things we need to make sure we are capitalizing on,” Gilmore said during the presentation. “We are asking for a ½ cent sales tax.  We really do need the support. We are strongly considering bringing the rural health care clinic back inside the walls of the hospital and merging our specialist health care providers with the rural health care clinic. 

“With the stuff we are doing, we hope to be at a (monthly) break even in 6 to 12 months, however that does include the community passing the ½ cent sales tax.”

Breaking even means being able to paid monthly bills.  The debt load beyond that may be determined by the bankruptcy court.

“We are not unique in our challenges,” Gilmore added. “I was recently in Washington DC talking to our congressmen and telling them that they had to do more to help us stay sustainable.

“Out of the entire critical access health care system right now – out of some 1,400 across the nation – 650 of those, so almost half, are in high risk of financial failure. They are in the same boat we are and the reasons for that tie back to reimbursement and the challenges of getting fair contracts. Some of those hospitals are doing quite well but they have a much different payer-mix than we do and a much higher volume than we do.

“We are doing everything we can to get to sustainability. We are close, but we are not there yet. I cannot 100 percent guarantee that we will get there, but I do feel confident that with the measures we are taking and the team we have in place and with your local support, we can get there.

“And one more thing: If for any reason, we are not successful and we could not keep going and we had already passed the sales tax, our board of directors can bring that tax up for another vote and it could be eliminated. Right now there is no sunset on it. I don’t see things getting cheaper. I believe we will need that tax going forward.”