The world of hospital finance is a complicated one. The Sumner County Regional Medical Center is no exception as local officials try to keep the facility in Wellington running.
It is not in danger of closing, but making ends meet is a constant struggle.
Earlier this month the city decided to give the hospital $880,000, and that will get the hospital even.

By James Jordan

Wellington Daily News

The world of hospital finance is a complicated one. The Sumner County Regional Medical Center is no exception as local officials try to keep the facility in Wellington running.

It is not in danger of closing, but making ends meet is a constant struggle.
Earlier this month the city decided to give the hospital $880,000, and that will get the hospital even.

"That got us to net 30 days, so we are back to even," director Leonard Hernandez said. "We are doing all we can to make cash flow increase. We have had a decline in volume so we have to get better at collecting cash."

There are a lot of reasons the hospital struggles financially, but Hernandez' ultimate goal is to be self sufficient.

"We are not sitting here falling apart," he said. "We are tyring to do things that will make us better."

He said the hospital strives to provide a quality service. He noted that several surveys have been done in various areas of the hospital to measure efficiency and quality.

"In all those areas, we had one deficiency. I would match that up with any hospital in Kansas," he said.

But even with good service, the finances are the major issue. They provide a lot of services and hope to do even more, but collecting money is a huge problem.

Collections are just one of many issues, and collecting from the government is even harder at times. There was a reimbursement from the federal government in March for $847,000, but that money was expected and needed last October.  
Hernandez said a mix up at the federal level delayed that payment, and by the time it arrived, it was already spent. This year the hospital will get $565,000 from that program, and a lower amount the following year.

So even the money the city gave the hospital, just got it to where it is not in debt.

Several things have caused the hospital to be in dire straits financially, and Hernandez said they are trying to do some things to change that direction.

The 2013 year was a bad year, mostly because they did not have a surgeon, and because they went from having nine doctors to six. That caused a big dip in out-patient services. They have since hired a surgeon, and are hopeful that will get more money coming in.

Another obstacle is collections. Hernandez said the hospital has gone to an outside source to get more collections, but that is a slow process. They also face huge write-offs. They bill a certain amount, but insurance companies pay only a certain amount.

On average, Hernandez said, the hospital gets only about 42 cents for every dollar it bills.

Emergency room visits from people who do not have insurance, and cannot pay, are also a drain on the facility.

Have the surgeon in place, and getting better at collecting debts, are two positive things the hospital is doing to get headed in the right direction.

Another possibility is changing the hospital's designation. Wellington is a small rural town, but because it is so close to Wichita, is is considered an urban type hospital for the government's accounting purposes. However, they have recently applied to get that status changed.

"We are trying to get our classification changed from urban to rural. That will make us eligible to be named a sole community hospital. That wold dramatically increase our inpatient and lab reimbursement,"Hernandez said. "It is a big deal."

A lot of the hospital's difficulties then, lie with dealing with government programs and in dealing with insurance companies.

"It is a difficult business. It is challenging. It is not that we are not busy, but we have all the other challenges," Hernandez said.

As far as patients in the hospital goes, not much has changed. The hospital averages about 30 patients in the hospital a day, and that has not changed over the past several years.

Emergency room visits have not changed much either, with about 4,000 visits per year.

What has changed is out-patient visits. These are situations where the surgeon would be doing a procedure and the patient not being admitted to the hospital. Because there was not a surgeon in 2013, that number went from 20,000 in 2010 to 16,000 last year, and that is the main thing that has put the hospital in a bad situation financially.

With a surgeon and a full team of doctors, the hospital generates $84,000 per day in charges. With the number of doctors down, and without a surgeon, that number fell to $66,000 per day,which over time makes a tremendous difference.

Hernandez has also tried to cut costs. Since arriving as director 18 months ago, he has trimmed the staff from 143 full time equivalent to 128. In their place he hired a Certified Registered Nurse Anethesist and added a surgeon.

The outsources of coding and billing should also help, but Hernandez said the company has not done as well as hoped. he plans to hold them more accountable and they are trying to do better.

Still, even with that, they are collecting less than 50 cents per dollar they bill.
Currently there is about $5.2 million in outstanding debt the hospital is owed. Of that, $2.8 million is 60 days or less old. The remaining $2.2 million is older than 60 days, and $1.7 million of that is owed by insurance companies. About $663,000 is private pay.

Citizens of Wellington had also been supporting the hospital with a half-cent sales tax that generated a significant amount of money. That expired at the end of 2013 Hernandez said he didn't want to just automatically go back to voters and ask for it to be renewed. He wanted to see how the hospital would do without that tax.

"The reality is, it will take additional funding to keep functioning. We will probably go back to that (sales tax), he said.

"We will put all this out there in a public forum for the sales tax issue. I want people to understand what our situation is moving forward," he said.

In the meantime, Hernandez said the hospital is still trying to improve.

They are pursuing getting a dialysis machine, that could serve local clients. That is in the works already, and could become a reality soon.

Another thing is to convert the south wing into a unit for behavioral patients. Currently they are on the second floor. If the south wing could be converted, that would free up space on the second floor for general and residential rooms.

That would generate an additional $150,000 per year, and those residential rooms are private pay, which hospitals like. There would be no need of trying to collect from insurance companies and getting less than 50 cents on the dollar.

"That wold be half a million a year in cash, that's a big piece," he said.

Hernandez said he knew when he became director, it would not be an easy fix.

He believes that in three years the hospital can return to being self sufficient if things continue to go well, and with some help here and there from the city.

"We want to justify them helping us. We want to show them we are doing all we can to be self sufficient. On a long term basis, if we can get that done, I think the community will feel good about us and we will be in good shape," he said.

The hospital's finances are also impacted by the Affordable Care Act, or "Obamacare."
Hernandez said the fact that Kansas has ot expanded Medicaid has had a negative impact on the hospital. Kansas refused the expansion as a way of opposing the Affordable Care Act, and rejected federal programs to expand Medicaid.

"There are a lot of people in Kansas who come to the emergency room who could have insurance. If they had insurance at least we would have a shot at some of that," he said.

He said there are a lot of people in the Wellington area that would have benefited from the expansion of Medicaid, which would have expanded insurance for poor people.

He estimated that Kansas' opposition to the Affordable Care Act, and not expanding Medicaid, will cost the hospital $200,000 per year.