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Hospital Executives Report Better Finances

6 min read

Last week, Arkansas Business staff writers checked in with the top administrators of five hospitals, large and small. Here’s what we learned.

Walter Johnson
Jefferson Regional Medical Center, Pine Bluff

Jefferson Regional Medical Center was saved from a net loss in the year that ended June 30 thanks to the return generated by its investments, CEO Walter Johnson said.

But the first quarter of FY2015 is looking better, he said, thanks in part to the “private option” Medicaid expansion, which began to be felt only in the final weeks of the last fiscal year.

“For [last] year, our uncompensated care was $31.5 million,” Johnson said — and he specifically noted that he was referring to actual costs, which had increased for two years.

“But right at the end of the year, one of the best things that happened — especially for the areas of the state with low incomes and poor health — was the Arkansas private option. And we’ve really seen that impact in a really positive and favorable way.”

The private option is expected to generate about $6 million in additional revenue per year, which Johnson said is not enough to offset charity care nor reductions in Medicare reimbursements. But, he said, “It appears to be a real favorable impact for the sickest and neediest to be able to get medical care and a real positive for the hospitals that provide the care.”

Some of the newly insured patients need education about their health care options, Johnson said, because they are used to using emergency rooms for all medical complaints.

JRMC is considering locating a walk-in clinic near its ER so that patients can be routed to the most appropriate setting without being turned away from the hospital, he said.

An entirely new hospital is also in the works. Some parts of the current facility are more than 50 years old, and the newest part is about 30 years old.

The leadership spent the past year doing master planning and evaluating architecture firms, ultimately settling on a partnership between TEG Architects, which has an office in Shreveport, and RTKL Associates, an international firm based in Baltimore.

The board hopes to open the new hospital about 2022, Johnson said.

— Gwen Moritz

Darren Caldwell
DeWitt Hospital & Nursing Home

CEO Darren Caldwell said the Affordable Care Act and the state’s private option have helped the DeWitt Hospital & Nursing Home. The level of uncompensated care has decreased, the number of patients with insurance has increased and bad debt has fallen.

“We’ve seen really good numbers,” he said. “In talking with my counterparts in other hospitals in this region, they too have seen good numbers.”

His facility is anticipating that money received through the state’s insurance exchange “could mean a roughly $200,000 increase to our bottom line, which is about a 2 percent improvement over our total net revenue.”

“That’s a pretty big deal,” Caldwell said. “It will almost be an immediate decrease to our bad debt. We’re showing our bad debt decreasing by the same amount that our collections are increasing due to the [health insurance] exchange.”

The DeWitt Hospital is even seeing an increase in collections from “self-pay” patients. “The people who are on the Medicaid-supplemented insurance exchange who never had enough money to pay on their bills, we’re now collecting on that,” Caldwell said.

“For example, in our ER self-pay last year, we collected 22 percent,” he said. “But this year, we’ve collected 34 percent. And on outpatient not including the ER, last year we collected 52 percent and this year we’ve collected 81 percent.”

Caldwell thinks the insurance coverage provided under the ACA is responsible for these improved numbers.

Visits to the hospital’s ER haven’t declined, he said, but the facility’s clinic visits have increased.

— Jan Cottingham

Barry L. Davis
Arkansas Methodist Medical Center, Paragould

After weathering some tough times, there seems to be light at the end of the tunnel for Arkansas Methodist Medical Center, the 114-bed hospital in Paragould.

“We have made significant changes both in terms of expense reduction and revenue enhancement, and our employees stood with us through some difficult transitions,” CEO Barry Davis said in response to emailed questions. “Today, I believe we’re seeing the positive results of that strategy, and we are now in a position to consider expansion plans that align with the growing demand for outpatient procedures and related services.”

Like many rural hospitals, AMMC has seen a decline in inpatient volume.

In December AMMC and St. Bernards Healthcare of Jonesboro opened the Paragould Medical Park. The 60,000-SF, $12 million complex houses four physician clinics.

The Medical Center opened another family practice clinic in June, independent of its partnership with St. Bernards.

Davis said the private option Medicaid expansion is an “early success,” allowing the state’s uninsured to receive the health care they need while reducing the burden of uncompensated care on hospitals like his. And that means that he’s worrying about the results of next month’s general election.

“Reduction or elimination of funding for the Private Option would be a nightmare scenario for rural hospitals,” Davis said.

— Michelle Corbet

Margaret West
Magnolia Regional Medical Center

Although Magnolia Regional Medical Center reported a loss of $2.5 million on net revenue of $18 million last year, its CEO says the hospital had a good year.

The hospital built a new facility in 2010 and has debt of $38 million; the loss mostly reflects the depreciation, which was $2.4 million, Margaret West said.

The hospital has tried to be “proactive” in meeting the ACA’s goals for implementation of electronic health records, she said. Magnolia Regional has received about $3.5 million in federal money since 2011 for records conversion.

West said the hospital has been able to use those funds to “keep our hospital IT growing, so that we are meeting those requirements.” The ACA prescribes penalties if hospitals fail to adopt electronic health records.

In addition, she said, the hospital has hired a hospitalist — a physician who is a hospital employee and cares only for hospital patients — in what she said was a successful effort to increase lagging patient visits.

And the hospital has had a boom year in babies, having recently delivered its 316th, “about double what we have in years past,” West said.

She thinks Obamacare has had a net positive effect on the hospital.

“We’re seeing more insurance, but the downside is we have a lot of write-offs that we didn’t budget for,” West said. ER visits have been about the same, she said.

But the costs of supplies and labor have increased so that’s “a continual struggle,” West said, adding that she just tries to take it year by year.

— Jan Cottingham

Ralph Beaty
Great River Medical Center, Blytheville

Mississippi County Hospital System, owner of 148-bed Great River Medical Center in Blytheville and 25-bed SMC-Regional Medical Center in Osceola, is getting more money from insurance companies and less from patients’ pockets.

CEO Ralph Beaty said the increase in insurance revenue can be directly attributed to more people having access to insurance since the debut of the ACA and Arkansas’ private option.

Births have also been on the rise — 67 at Great River in Blytheville, a record since Beaty became CEO four years ago. Meanwhile, emergency room visits have remained essentially flat at both facilities, he said.

In calendar year 2013, Great River Medical Center saw a 10 percent return on net patient revenue of about $19 million. Beaty referred to the hospital’s profit as “low-hanging fruit” that results from simply hiring more doctors.

“The patients were out there; we just didn’t have the physicians to take care of them,” he said.

Since the county took over the management of the two hospitals from Ameris Health Systems of Nashville, Tennessee, in March 2009, Beaty has been working to realign doctors and bring in new physicians.

Beaty is also working to establish a hospitalist program that will allow admitting physicians to spend more time in their clinics and less time making rounds at the hospitals.

— Michelle Corbet

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