Provider Law Likely Heading Back to Court

by Mark Friedman  on Monday, May. 5, 2008 12:00 am  

Lynn Weaks, CEO of Arkansas Surgical Hospital in North Little Rock, says the 41-bed facility won't be able to survive long term without higher reimbursement rates.

Jones said the reimbursement rates are partly calculated to offset the cost of charity care, of which St. Vincent provides more than a physician-owned specialty hospital.

The surgical hospitals said they needed the contracts to prove they were being paid less than full-service hospitals in the same town.

The surgical hospitals also said the low reimbursement rates could lead to a reduction in patient choice.

James Bowen, an attorney for Arkansas Surgical, said at the April 4 hearing that if the surgical hospital was paid $1 less for a knee operation than the full-service hospitals, then there would be no effect on patient choice.

But - in the extreme case - if the surgical hospital was paid $3 for a procedure and the full-service hospitals were paid $20,000 for the same procedure, "I think it's equally clear in that situation that you would have an impact on patient choice," Bowen said. "Quite obviously, we'd have to turn away patients."

Nate Miller, CEO of the Surgical Hospital of Jonesboro, said it's difficult to determine how many dollars his hospital has lost as a result of being paid less than the full-service St. Bernards Medical Center in Jonesboro. He believes the total during the five years the Surgical Hospital has been open is "several million."

Miller said the Surgical Hospital wanted to accept a contract with UnitedHealth but the rates it proposed were lower than the cost to do the procedures.

"When it's below your costs, there's not opportunity to make up for it in volume," Miller said. "The more you do, the more you lose."

He said the hospital isn't in danger of closing, but it continues to lose money.

The Surgical Hospital reported losing $687,000 on patient revenue of $53.3 million for 2006, the most recent numbers available to Arkansas Business.

"If we were just paid consistently with other facilities, we would be making money and have a very secure financial future," Miller said.

HealthPark Hospital also reported losing $1.7 million on patient revenue of $66.4 million in 2006.



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