Officials with The Memorial Hospital (TMH) are looking at a plan that could allow the construction of a new hospital with little or no tax support.
TMH is considering becoming a Critical Access Hospital, under which the reimbursement structure from Medicare is reverted to an older, more comprehensive program.
The Hospital Board voted on July 25 not to ask Moffat County taxpayers for an additional mill levy to fund a new hospital. One reason for this decision was the questions that remained on funding issues. The option of TMH becoming a Critical Access Hospital was one of those unanswered possibilities.
TMH officials have been working on a plan to construct a new hospital for three years. A new facility is needed, they say, because the existing building does not meet federal building codes or patient needs.
The Tax Equity and Fiscal Responsibility Act (TEFR), passed in 1983, changed way Medicare reimbursed hospitals for services. It went from an actual allowable cost system, which covered a larger variety of costs, to a prospective pay system, which limited the number of procedures a facility could be reimbursed for. The aim of this program was to reduce the cost to the government, and in this aspect, the change was successful.
There were drawbacks, however. Smaller hospitals that couldn't absorb the loss from the Medicare reorganization struggled to remain open. In 1997, the option for Critical Access Hospitals (CAH) was created in the Balanced Budget Act, and over the ensuing years, amendments have been made to attempt to ensure that rural hospitals could survive.
In order to become a CAH, a hospital must be a rural health care facility at least 35 miles from the nearest hospital, currently participate in Medicare, provide emergency room service 24 hours a day, seven days a week, 365 days a year, meet minimum staff guidelines, have an annualized average length of stay of under four days, and a maximum acute care inpatient count of 15 patients.
"We match up with every category, but there might be something to worry about with the census [of 15 patients] category. In the beginning of 2000, we had eight days in where we had more than 15 acute care patients at the time of each census, but for the past 450 days we haven't been over that requirement. I don't believe that will hold us back if we decide to move forward with this option," said TMH Administrator Randy Phelps. "This is a possibility we will evaluate very, very carefully."
The benefits to TMH in becoming a Critical Access Hospital are tempting. TMH could see an estimated $950,000 in additional yearly net income, allowing the hospital to cover all or most of the estimated debt service for a $20 to $25 million facility. Reimbursement costs for ambulance service would also improve, as would the fee schedule for surgeons they would receive 115 percent of the Medicare cost for outpatient surgeries.
"Our facility would be more attractive to new doctors with the higher pay scale, making recruitment easier. Other specialists, like gynecologists, would be encouraged to work out of our facility," Phelps said.
Under the CAH designation, emergency room physicians would be eligible for stand-by pay, the hospital would be eligible for low-interest rate loans for equipment and construction, the facility could sustain its accreditation from the Joint Committee on Accredited Health Care Organizations, and TMH could revert back to its present designation as an Acute Care facility whenever it chose. There would also be no restrictions on the services or equipment that could be added, or on physician recruitment.
"If an opportunity presented itself, there would be no prohibitions on offering any type of services to the community," Phelps said. "If we ran into frequent problems with the 15-patient census requirement, for example, we could revert back to Acute Care. This could be handled as an interim strategy. We have to continue to look at this option, and see if it is a viable system for our facility and community."
The cap on acute care patients at 15 is a possible issue with the size and composition of the community served by TMH. The reason TMH went over the limit in the early months of 2000 was a flu epidemic, and how that scenario would be handled if it happened again is an issue that needs to be researched.
"Part of our process of looking at this option would be to talk about different scenarios. How would situations like a flu epidemic or a bus crash be handled? Before anything is said and done, we need to find out the answers," Phelps said.
TMH will get advice from a consultant this week, and hear a comprehensive report from the Quorum Management group in September on how TMH would function under the Critical Access system. That report will include demographic comparisons with Critical Access hospitals that service similar communities, patient care reports and case studies.
Possible drawbacks to becoming a CAH are the necessity of forming a network agreement with another hospital to deal with overflow, and the perceptions that the community and staff have with the change to a Critical Access facility.
"Until we get a report back and see where we are, we don't want to put the cart before the horse. The enhanced reimbursement goes a long way toward mitigating the possible tax burden on the community; maybe not all the burden, but that remains to be seen," Phelps said. "Balancing the net income stream opportunity against the risk of not being able to offer care to a member of the community is the crux of this decision."
If the Critical Access option was taken, the changeover would be relatively quick, mostly a matter of paperwork, Phelps said. The construction of a new facility could begin in the spring of next year.
"We have received a $25,000 grant to fund our study of this option, and I believe we should know our inclination on this possibility by November," he said.