Hospital Board approves 2019 budget, addresses financial issues

A wide array of items were on the agenda at the East Adams Rural Healthcare (EARH) Board of Commissioners meeting on Nov. 15, including the approval of the 2019 EARH budget.

The meeting—which lasted nearly two-and-a-half hours—also covered the board’s recruitment for a new CEO ahead of CEO/CFO Gary Bostrom’s departure next June, provided an update on the training being provided by the public accounting and business advisory firm Eide Bailly to the hospital’s billing staff, and talked about how the hospital could better retain both staff and clients moving forward.

The resolution to approve the 2019 budget passed unanimously, although Commissioner Ross Heimbigner recused himself due to a conflict of interest in regards to some portions of the budget. The budget is projected to have a total net surplus of over $57,000, compared to the 2018 budget’s projected shortfall of about $292,000.

The 2019 budget’s total operating revenue is set at nearly $9.4 million, while the 2018 budget’s operating revenue is projected to be about $9 million. For reference, the 2017 budget’s actual total operating revenue was about $7.9 million. While the total operating expenses are expected to be greater than the operating revenue in 2019, the non-operating revenue—such as monies the district receives from tax subsidies, the EMS Tax Levy and grants—is expected to more than make up for the net operating loss.

Commissioner John Kragt shared his concern about the disparity between the projected total operating revenue and total operating expenses, saying that without the non-operating expenses the hospital’s operating at a roughly $1.2 million loss.

Board Chairman Eric Walker said that every hospital he has seen that is roughly the same size as EARH operates at a negative operating margin, “and it’s usually pretty darn big.” Kragt questioned if that was true and asked Walker how he determines the size of hospitals. Walker said that he determines the size based on a hospital’s net operating revenue, rather than the city or county’s population that it resides in and other potential indicators.

In other news, Sharon Shelton—a healthcare consulting manager for the firm Eide Bailly—was present at the meeting to talk with the board about the work she has done with EARH’s billing department and to identify and explain the problems that have been hindering the hospital.

Eide Bailly initially started off its work at EARH with a revenue cycle assessment, during which they found several things that needed to be fixed.

“We have some Accounts Receivable challenges, we have some timely filings, we have appointment scheduling issues, we have issues with Next Gen (the EARH IT system),” said Shelton. “We also have some reporting difficulties, getting the actual data out of the system.”

Eide Bailly will also conduct staff training next month, which won’t be limited to just the business office. Shelton will be conducting two “Revenue Cycle 101” sessions to the entire organization.

“The revenue cycle isn’t [relevant] to just the business office,” said Shelton. “Everyone here plays a role in the revenue cycle. We have people in physical therapy and the emergency department who take information from patients that are registered, and we have nursing staff who’s responsible for prior authorization forms and activity-based management.”

Shelton says that these duties aren’t being followed through appropriately, and that she’ll emphasize the importance of the revenue cycle and how everyone at EARH fits in to that. She will also talk about how everyone is needed so that EARH can continue to make the hospital as successful as possible, “because [EARH] is very, very important to the community.”

The hospital is also having clearinghouse issues. When charges are entered into the system and edits are made, it is released to a clearinghouse. The clearinghouse sorts it out to the different payers based on requirements.

Normally there is only one clearinghouse where the claims are sent electronically. The clearinghouse then “scrubs” the claims and if the claims aren’t clean, the hospital will have to fix them before sending the claims to the payers. Once the payers have processed the claims, it comes back to the clearinghouse, who will electronically remit that information to the hospital.

EARH, Shelton says, is in a situation where the hospital has two clearinghouses, rather than just one. The hospital has one clearinghouse for when the claims go out, and another for when the claims come in.

Shelton says that the problem is that the two clearinghouses don’t communicate with each other, making it difficult to try and gather the data. Bostrom said that one of the previous business office managers made the decision to go to two clearinghouses, and that the hospital will be changing to go back to one clearinghouse, which Eide Bailly has recommended.

Shelton said Eide Bailly wants to make sure that EARH’s IT system, Next Gen, is making edits before the claim gets out the door. That will help claims get out of the door much quicker and improve the hospital’s currently slow process.

Shelton said the big focus moving forward is on dealing with accounts receivable up to 365 days.

Eide Bailly also found that one of the reasons why claims are being held up is because of registration issues in both the emergency room department and physical therapy department. Shelton said that they’re going to look into tightening up the registration process so there aren’t as many loose ends left to fix.

Shelton stressed that in regards to new Medicare cards being sent out, the claims need to be filled out with the same wording—such as a person’s legal name—that is on the card. Claims can be held up because someone may list a nickname they go by rather than their full, legal name.

Kragt commented that there has to be a certain expectation on patients at some level to provide their legal name, but Shelton said that EARH hasn’t set that expectation for their clients.

“I can tell you that if you went to the Mayo Clinic in Rochester, you would know exactly what your expectations are as a patient,” said Shelton. “You would be required to do that. But we haven’t set up policies like that to set the same expectations for the patients when they come here.”

That is one of several policies that Shelton says EARH needs to “spiff up a bit.”

The commissioners also talked about how they could try and retain both employees and clients from seeking other opportunities. Walker noted that many residents in the county go to Spokane for their healthcare as one of many errands that they tend to when they make a day out of it. They might also be seeing their attorney or shopping at Costco when they travel to Spokane. Walker said it’s just a point of Ritzville getting to the point where people don’t need to travel to Spokane to get their basic, everyday needs.

With an employee leaving because they didn’t like the two hour, round-trip commute and wanted to spend more time with their young children, the board also pondered how they could entice people to move to the community. Bostrom said that there’s a $10,000 moving incentive in the CEO job application to try and entice interested applicants to move to Spokane, and that perhaps the board could increase that if they think it will draw more high quality candidates to the position.