White River Health System Preps ER for Health Care Reform

White River Health System in Batesville is preparing for the possible rush of patients once health care reform is fully implemented next year.

On Jan. 1, most people will be required to have health care insurance or face penalties under the Patient Protection & Affordable Care Act, commonly known as Obamacare.

Gary Bebow, the CEO of the health care organization, is gearing up for that day by pushing forward plans to expand the emergency room of the system’s flagship hospital, White River Medical Center in Batesville.

(Purchase the Full List: Click here to buy the list of the 75 Largest Private Companies in PDF or spreadsheet format.)

The $4.5 million project should start by the end of the year and be completed in 18 months. Once the expansion is complete, the emergency room will have 26 treatment areas and could handle 40,000 patients annually, said Bebow, 63, who has been at White River for 22 years. The hospital currently handles more than 30,000 patients a year with 14 treatment areas, but it was only designed to treat about 20,000 patients a year.

“I certainly think the emergency room is going to be an entry point into the hospital,” as a result of health care reform, said Paul Cunningham, executive vice president of the Arkansas Hospital Association.

Bebow also believes that the emergency room is a great tool for community relations for the hospital.

“If you could provide timely and great medical care, … that really goes a long way for the community to embrace you,” he said.

Still, Bebow is not really sure what the impact of health care reform will be.

“It’s very difficult to predict volumes,” he said in an interview from his office in the hospital last week. “We’re in so many uncharted waters right now.”

The past two years White River Health System’s revenue has remained flat at $170 million for its fiscal year that ended Sept. 30. Its revenue, though, is good enough for No. 46 on Arkansas Business’ list of largest private companies ranked by revenue. It was No. 48 on last year’s list and No. 47 on the 2011 list.

White River Health System’s network also includes eight physician clinics mainly in the counties surrounding Independence County and the 25-bed Stone County Medical Center.

More Insurance Coverage

Bebow projects that after Jan. 1 more people will go to a doctor because they will have insurance. But he thinks there won’t be enough primary care physicians to see the newly insured, so those patients will turn to emergency rooms for treatment. That could be a problem for White River Health System.

The last time the hospital, which opened in 1976, expanded its emergency room was around 1995. At the time, the hospital was seeing about 12,000 patients a year. The expansion increased the capacity to 20,000 patients a year, but the hospital quickly outgrew that, he said.

Making matters worse, patients who were rushed to the emergency room shared the same waiting room as patients who were at the hospital for scheduled procedures.

To add room, the hospital in June 2011 started a $35 million expansion and renovation project, which attached a 35,000-SF, four-story patient tower to the building.

The project also expanded the cafeteria, gift shop and pharmacy and separated the emergency room patients from the others in the hospital.

In addition, the hospital added 60 patient rooms, giving it about 245 beds now.

The added space hasn’t helped the hospital’s bottom line, though. Its net income has dropped from $7.4 million for the fiscal year that ended Sept. 30, 2011, to $2.4 million a year later.

“Last year we found we had a lot more people who didn’t have the ability to pay, so we had more bad debts and charity care and write-offs from insurance companies,” Bebow said.

Low Medicaid and Medicare reimbursements also have eaten into the net income because they don’t cover the actual cost of some procedures. About 57 percent of the patients at WRMC are on Medicare, “which is high,” Bebow said. Around 40 percent is considered average, he said. But the number of Medicaid patients is only about 10 percent.

The hospital also saw a drop in its inpatient admissions, which fuels its income, he said. The admissions fell from 9,000 to 8,400 between the 2011 and 2012 fiscal years.

For the first six months of the current fiscal year, inpatient admissions were 4,400, which is on par with the 2011 figures, he said.

And the first six months of the year, the hospital’s net income is $2.6 million.

“We’ve bounced back some this year,” Bebow said.

Community Hospital

White River Medical Center is the largest employer in Independence County, said Larry Jones, director of Independence County Economic Development Inc.

“It really provides a great economic boon to our county,” he said.

The system has about 1,450 employees, while most of those — 1,250 — work at the hospital.

The hospital has a 72 percent market share in the county of about 36,000, Bebow said. And those who don’t use the facilities are either out of the county at the time of the illness or have to go to another hospital because White River doesn’t offer the treatment, such as open heart procedures.

Bebow said the health care system tries to offer a wide variety of services that the community needs.

“We’re proud to take good care of our community,” he said.

While some other hospitals around the state have started exploring the possibility of forming a partnership with a larger hospital, White River hasn’t, Bebow said.

“My board of directors is very committed to remain independent because we believe the best decisions are at the local level, not out of Little Rock or Nashville or some faraway land,” he said. “We believe that no one knows the needs of our community better than we do.”