Chat with Samantha Johnston about 1A
October 29, 2007 Chat is closed, read transcript below.
Samantha Johnston, Service Excellence Officer of the The Memorial Hospital will answer your questions regarding the proposed mill levy increase, under Referendum 1A.
Welcome to tonight's Web chat session with Samantha Johnston, service excellence officer with The Memorial Hospital. Samantha has agreed to do the Web chat from 7 to 8 p.m. tonight, and I thank her for that. I'm Jerry Raehal, editor of the Craig Daily Press and moderator of this chat session. If you have questions, submit them, and I will post them when the time comes. Sam are you there?
Does the bond issue 1A strip the TABOR property tax protection that limits the increase in taxes to 5.5 % ?
And once that is removed it is gone and the larger tax increases can start, is that correct?
If this passes, is there projected construction begin and construction end dates? If so, when?
In simple terms, TABOR is a constitutional limit that restricts growth in government revenues to a prescribed formula for Moffat County that calculation is based on the Boulder/Denver Consumer Price Index. Any revenue the government collects above what the formula allows must be refunded in some fashion. A vote of the public is required in order to override the formula limits. TABOR has nothing to do with the 5.5% limitation.
The statutory "5.5%" Property Tax Revenue Limit, also known as the "Annual Levy Law" (Section 29-1-301, et seq., C.R.S.), applies to most statutory local governments that levy for property taxes.
TABOR was put into effect to prevent mill levies from increasing without a vote of the public.
In the 1A ballot wording, it states that the levy collected would be, "::and as a permanent waiver of the 5.5% limitation," which is only applicable to the 40-year mill levy in question. Further in the same sentence, the question states, "without affecting Moffat County's other taxes, revenues or spending (for hospital or other purposes) under the Constitution and laws of the State of Colorado. The "permanent waiver" refers to the length of the bond and has nothing to do with overriding the 5.5% Gallagher limitation into perpetuity. The total revenue that Moffat County can collect for its general fund is now and will always be limited to 5.5% unless voters approve a mill levy or bond issue such as the one requested by TMH. Voters are only approving this issue, no other amendments to the law.
Sam did you see the question submitted by Genco?
If the mill levy is approved, we are estimating a 13-month construction period beginning in July 2008 pending final HUD project approval. We anticipate a late 2009 completion.
Why was some construction started prior to this mill levy taking place?
The pre-construction infrastructure work that you see at CNCC has a two-fold purpose. First of all, TMH received a $1 million DOLA grant, combined with $750,000 from CNCC to use toward the completion of the infrastructure. Originally, the DOLA money was to be used by 2007, but TMH filed an extension, which gave us until July 2008 to utilize the money.
TMH cannot receive the deed to the 15-acre parcel from CNCC until the infrastructure is completed. Should the mill levy not be approved, the infrastructure will still be utilized by CNCC as they begin construction.
Sam, the ballot language is interesting can you explain it in basic terms?
I'm not sure what you're looking for, but I'll point out a few clarifications to the language:
1. The financial projections for the payment of the new hospital debt service are based on annual tax revenues of no more than $1.5 million annually. Because property tax valuations can change significantly on an annual basis, TMH Board of Trustees wanted to ensure that taxpayers would not pay more than $1.5 million annually, regardless of how high property valuations rise. In the end, taxpayers will pay about as much in 20 years as they are paying today.
2. It has always been the intent of TMH officials that taxpayers would only pay for the hospital for the length of the construction loan. To make formal the intent, TMH Board of Trustees and Moffat County Commissioenrs signed a Joint Resolution whereby both entities agreed that the intent of the hospital question was to collect the mill levy for the length of the loan only and that both entities should review the debt in future years and take actions to discontinue collecting the mill once the project is paid off.
3. TMH is asking voters to approve the mill levy increase for 40 years - the maximum timeframe allowed by law for such a levy. The flexibility in the timeframe will allow for refinancing of the loan and/or flexibilty in the terms of HUD financing.
Just so you know, at this point, you will need to refresh the page to see the chat as it goes. We will get this fixed as soon as possible.
I think the community as a whole would love to see a new hospital facility. I think we are all in agreement that the facilities we have are outdated.
However, I have a problem with paying the operating costs of ANY facility. What are your receivables like, what have they been on average for the last 10 years? I know someone who worked for TMH in this department and the number she threw at me was ASTOUNDING, and shows me that monies being collected by TMH are way below what would be considered competent. If the tax payers of this county are footing the bill for the operating costs it would be safe to say this collection department could continue as it has? I work in this industry and I realize the difficulty of maintaining an acceptable receivable balance and the difficulty with Insurance companies and indigent patients. Alas, a facility must collect to stay open ( unless the tax payers are picking up what it can't collect ), I think the community deserves an honest answer to these questions. A balance of that size has to include extremely outstanding insurance claims:this is not just outstanding patient collection. How much monies have been collected by your collection agencies but have not been returned to TMH?
My husband and I also donated to this campaign to raise monies for the new hospital and I have to tell you I am extremely disappointed in how it is being used. So many full color ads, fliers, pamphlets, its just overkill. We were under the impression that our gift was going toward a new facility not toward the expense of browbeating and scaring the community into raising taxes. By scaring, I mean vote for this NOW or it will cost you twice as much next year. It's just too much, the more you send out fliers and pamphlets the more it discourages the community into voting for this facility. It does not matter that it's from a different section of the campaign for a new hospital. It just shows that the money TMH was entrusted with is being wasted.
The problem seems to be that the community just does not trust how you will use our taxes. And that trust cannot be won back; no matter how many fliers and pamphlets you distribute.
I look forward to your answer to the questions above. I hope you can change my mind, and honestly if 1A did not include operating costs I would vote for it in a second.
I will post answers to your questions one at a time.
1. Zero TMH dollars or TMH Foundation dollars have been spent on the marketing or publicity of the mill levy campaign. All literature, radio advertising, newspaper advertising or other marketing you have seen with regard to 1A has been funded by the collection of private donations from businesses and individuals in Moffat County. This information is avaiable on the Secretary of State's web site and we are registered as Committee for a New Hospital.
The TMH Foundation money about $1.2 million is being utilized for its original intended purpose, which is completion of a future hospital project. No Foundation dollars to date have been used on the pre-construction or any other costs associated with the new hospital.
In answer to your question about operating costs:
TMH board members and administration originally wrote the ballot question to indicate that the dedicated 3 mills would be collected for the length of the project loan, estimated to be approximately 25 years. Unfortunately, because TMH is a county hospital, we had to follow certain rules and regulations that prohibited us from tying a mill levy to long-term debt, which is ultimately why the ballot wording says "to be applied in each such year to the operational and capital budget:." The initial feasibility studies for the new hospital project factor three things a.) 3 dedicated mills or approximately $1.5 million annually (whichever is lesser), b.) revenue and c.) operational reimbursements. The mill levy is a critical piece of our ability to afford the new hospital project, so it would nearly impossible to collect the 3 mill levy and apply it to anything but the capital project. For this project, the county would collect the levy, deposit it into the TMH general fund, and then we would write the check for our portion of the financing there is no other way TMH can fund it.
The vote is to provide the hospital with a designated 3 mils for capital improvements. In the future will the county still be funding operations in addition to the building?
The standard for judging aging of receivable balances is the percentage of receivables over 120 days. Different payer sources have different percentages considered acceptable. A higher number does not necessarily mean that collections aren't good; it most likely means you are not turning these accounts over to collection agencies or writing off to bad debt as quickly as we should. In our case, this is true - we do not turn self-payers over as quickly as we probably should.
The hospital standard nationally is 23% or less of receivables should be over 120 days. Our commercial percentage is 16.3 % and our self-payer percentage is 43.0%. Our overall percentage is 24.9%.
Receivables move up with increased activity, and increased activity is one of the reasons that our current hospital is inadequate.
Net hosptial industry standard to judge this by is net days in AR. The Critical Access Hospital (which TMH is) 50th percentile is 54.4. Our average for 2007 has been 51.5, with our range over the past 5 years being between 51.2 in 2003 and 59.5 in 2006. Therefore, we generally are performing quite well. Remember, the only immediate payers (payers we can expect to collect from on the spot) we have are the uninsured, and of course they are also the least likely to pay. Commercial insurers pay on average in 30 days, and Medicare and Medicaid slightly longer. The days in A/R number also includes the many, many self-payers that are in extended payment plans, which can last a year or longer. Obviously if we were a for profit entity those numbers would be better, we wouldn't accept the uninsured, and require all payments for non-emergent services either up front or at time of service.
I'm not sure what number you are referring to that has astounded you, but our current net A/R is $3 million dollars, but that is only 16% of our annual net revenues, which is also well within industry norms.
We receive .485 mills from the county now, which equates to about $220,000 annually. Those funds are currently used as reimbursements for obligations that the county has placed upon us - the VNA building maintenance and upkeep and the county ambulance service.
The county determines what level of mill funding TMH will receive annually, up to 1 mill.
We anticipate that we will continue to receive at least the .485 mills in the future because we don't expect our VNA and ambulance obligations to go away.
The intent of the 3 dedicated mills is for the funding of the new hospital capital project and not for operations. The language in the ballot question as answered above is for the purpose of allowing the 3 mill revenue to flow through our operating accounts and be payable to the lender.
I have never heard of juding a receivable by % over 120 days. Having worked in the banking industry for almost 10 years that is a new one to me. Receivables is based on Day in AR and a good target for Physcians Clinics which we deal with quite often is about 50 days. A hospital should be around 60 days. What is TMH's
After looking at TMH's financials for August, it appears TMH's Days in AR to be around 79. How are you calculating the 51?
Please see the above post to Jewel with regard to our days in AR. You suggest we should be at around 60 days, and our average in 2007 has been 51.5, so we are ahead of that standard.
Your second question about "around 79" days is correct, because that is the gross days in AR.
Net days in AR, which takes contractual allowances into consideration (consistent with all healthcare organizations), is around 51. Our current in September is approximately 59, but month-to-month volatility makes a year-to-date average more valid.
Does this answer your question?
These are complex questions, and I thank everyone for being patient while Sam responds.
Hi Sam: Please address an issue raised in a letter to the editor in today's issue of the Press. The author states that no blueprints exits for the new hospital and that the hospital board has no idea what the new hospital will cost.
When the board engaged AHFD (American Health Facilities Design), part of their requirement was to develop a facility master plan, which evaluated the new site, every activity that was currently being done in the exisiting hospital and every piece of existing equipment and furniture. From this information, AHFD was able to determine how much space would be required by each activity in the new hospital (based on current statistics and activity) - that space, with the equipment and furniture was then calculated by national, regional and Colorado construction costs and a preliminary budget was developed, thus the $42.6 million total.
To date, we have schematic drawings showing the square footage of each hospital department, but not blueprints. We know down to the soap dish and trash receptacles every piece needed in the new facility and this has been costed out.
When we accepted that preliminary budget number, we locked it as our goal and, after the blueprints are drawn and the construction manager evalautes the blueprints and gets estimates from contractors and suppliers, we will receive a guaranteed maximum price (GMP). We will always work this GMP to exactly $42.6 million (or less if feasible), because that is the maximum that we can afford.
Upon successful election results for the mill levy, we will beging the final design and blueprinting process; that process will cost hundreds of thousands of dollars, so we will not begin until we know that this project is approved by the taxpayers.
Most women I know who live in Craig commute to Steamboat to have a baby. Is there projected improvments that address this specific issue. If so, please expand.
Absolutely. As you probably know, Moffat County does not currently have an OBGYN - they all come from Steamboat. So, women commute to Steamboat to see that specialist.
We are actively recruiting OBGYN/physicians to live and work in Craig. Since July, we have interviewed two candidates in Craig and we will interview a third candidate and his family in November. Recruiting an OBGYN is one of our top physician recruiting priorities.
Additionally, for the first time in years, one of the Steamboat OBGYNs performed a delivery at TMH last week. We are optimistic that this will continue and grow in a new facility.
I am not sure what you are getting at between Gross and Net. The math is pretty simple -- Industry looks at total receivables as posted on the balance sheet devided by average daily revenue from the income statement. This comes out to about 79 days. If you lowered your average daily revenue by making a contractual allowance your Day in AR would go up. If you are lowering what you expect to receive by writing it off or down then you can make the Days in AR a completely meaningless number. In the financial world we always look at the gross days.
The entire healthcare industry works on contractual allowances. Our rates are set based on our actual costs to provide a service, however, what we are actually paid is set by the insurance companies and Medicare. The difference is called a contractual allowance. Since we can never collect that allowance, it can never be a receivable, and therefore appears as a unique healthcare P&L category called "Deductions from Revenue."
This is one of the most complex and frustrating aspects of healthcare finance.
Chief Financial Officer Barry Bergman is assisting with these posts and would be more than happy to visit with you on the phone or in person to make this more clear.
That was the last question of the evening, I want to thank Samantha for participating in this live chat, and thank all the participants. Sam, Do you have any other final thoughts?
Thank you for all of the considerate questions. I would be more than happy to provide as much further information as any of you need in order to make your decision about 1A. This is a tough issue because it is so complicated. In the end, the question really wants to know whether voters believe that we need this new hospital project. There are a lot of questions that are very good, but do not specifically relate to the intent and purpose of this project.
I encourage any taxpayer who has a genuine interest in improving operations or changing the way our hospital does business to apply for a Board of Trustee position - they are appointed by the Board of County Commissioners.
Email me at email@example.com with further questions or comments.
Thank you everyone, have a good night, don't forget that Dave DeRose, with Our Kids Our Community, will be chatting live on Thursday at 6pm on www.craigdailypress.com, we are accepting questions at this time, please see www.craigdailypress.com on the right side bar, to submit that question.