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'Bad debt,' has hospital facing over $9 million loss
Driven by rapidly growing bad debt, Midland Memorial Hospital posted a net loss of more than $9 million year-to-date, Chief Financial Officer Larry Sanz told the board of directors Wednesday.
by Ruth Campbell
Midland Reporter-Telegram
-Other challenges include growing number of indigents, uninsured patients, but no reduction in force planned.
By Ruth Campbell
Staff Writer
Driven by rapidly growing bad debt, Midland Memorial Hospital posted a net loss of more than $9 million year-to-date, Chief Financial Officer Larry Sanz told the board of directors Wednesday.
The administration will not propose a tax increase to cover the loss.
"We think there are changes that we can make in 2009 that will bring us back to break even, which is pretty big progress from where we're going to close 2008," hospital President and Chief Executive Officer Russell Meyers said. "As we finish (it) in the next month, we'll bring them back a budget that is effectively break even."
This is for the fiscal 2009 budget, which runs from Oct. 1 of this year through Sept. 30, 2009.
The idea of using tax dollars to pay for care for all uninsured and indigent people also was debated, with the board saying they would like to see how proposed changes work before changing the tax policy. The hospital currently uses tax funds to pay for indigent care. Meyers said about 25 percent of people here are uninsured.
"We've seen in our community a rapidly growing uncompensated care burden," Meyers said, "But it's not coming from people the district has traditionally covered, it's people with higher incomes than the district population. The district population, if anything, is shrinking probably because our economy is strong. Most people are employed, they're just aren't that many people under the federal poverty guidelines anymore."
Meyers said the debate over how to use tax funds will continue.
"Understandably, the district board is concerned that we probably haven't been as aggressive as we need to be in collecting from people who have the ability to pay," he said.
Administration plans to bring policy and procedure changes to the board that, "will cause us to be more aggressive and see how far that takes us in reducing our bad debt."
Short-term equipment financing of about $8.5 million -- used for imaging equipment for the new medical office building -- will have to be paid off with reserve funds. Meyers said this would use 25 percent of available cash on hand from the regular budget. Officials said the hospital has more than $100 million in reserves.
Paying down some of its debt will bring the hospital into compliance with its revenue bond agreements. Because the hospital is anticipating a loss this year, Meyers said, "We're in danger of violating some covenants in our bond issues. One of the ways to take care of that is to pay down other debt."
The revenue bonds were issued in the early 1990s. The bond covenants require a certain level of hospital profitability every year. "If we fall short of those, there are things we have to do to make up the difference and that debt formula includes how much debt service we'll have in future years. So by paying down some of the debt, we'll reduce the future debt service and bring ourselves back into line with the covenants," he said.
Asked if he anticipated a reduction in the 1,400 full- and part-time workforce, Meyers said he did not.
"We do know that our staffing has grown the last few years," he said. "What we're doing as we develop the budget is carefully scrutinize all the positions for which we're recruiting. We're going to be looking at every position that comes vacant to determine case by case, is this a position we can do without? Can we consolidate this job into something else?
"Mostly by attrition, we anticipate reducing our staff a little bit," but not a lot, Meyers said.
The larger issue, Meyers said, is reducing overtime and continuing to cut down on contract -- or temporary -- labor.
On the subject of hospital employee benefits, Meyers said the basic health plan covers the employee with no premium, but they have to pay the deductible and a co-insurance fee if they use services.
"Then we have other options where they can pay a little more and get a little richer plan," he said. "We anticipate that will continue to be the case next year, but the premiums they pay for the richer plans are probably going to go up. We're going to look at minor increases in co-insurance and deductibles, but nothing at all like what's happening in the rest of the industry."
Ruth Campbell can be reached at ruth@mrt.com.
The hospital has implemented several new programs to alleviate losses seen through the first nine months of the year, including:
-Requiring upfront payments for elective admissions and outpatient procedures.
-New collection strategy starting Aug. 1 to improve cash flow.
-Re-negotiating multiple managed care contracts to assure they reflect costs associated with delivering care.
-Improving internal processes to assure a patient's bill is filed with their insurance company in a timely manner.
These programs have been considered in creating the 2009 fiscal year budget and are expected to generate a minimum of $7 million in improvements.
Source: Backup material from hospital board meeting.
By Ruth Campbell
Staff Writer
Driven by rapidly growing bad debt, Midland Memorial Hospital posted a net loss of more than $9 million year-to-date, Chief Financial Officer Larry Sanz told the board of directors Wednesday.
The administration will not propose a tax increase to cover the loss.
"We think there are changes that we can make in 2009 that will bring us back to break even, which is pretty big progress from where we're going to close 2008," hospital President and Chief Executive Officer Russell Meyers said. "As we finish (it) in the next month, we'll bring them back a budget that is effectively break even."
This is for the fiscal 2009 budget, which runs from Oct. 1 of this year through Sept. 30, 2009.
The idea of using tax dollars to pay for care for all uninsured and indigent people also was debated, with the board saying they would like to see how proposed changes work before changing the tax policy. The hospital currently uses tax funds to pay for indigent care. Meyers said about 25 percent of people here are uninsured.
"We've seen in our community a rapidly growing uncompensated care burden," Meyers said, "But it's not coming from people the district has traditionally covered, it's people with higher incomes than the district population. The district population, if anything, is shrinking probably because our economy is strong. Most people are employed, they're just aren't that many people under the federal poverty guidelines anymore."
Meyers said the debate over how to use tax funds will continue.
"Understandably, the district board is concerned that we probably haven't been as aggressive as we need to be in collecting from people who have the ability to pay," he said.
Administration plans to bring policy and procedure changes to the board that, "will cause us to be more aggressive and see how far that takes us in reducing our bad debt."
Short-term equipment financing of about $8.5 million -- used for imaging equipment for the new medical office building -- will have to be paid off with reserve funds. Meyers said this would use 25 percent of available cash on hand from the regular budget. Officials said the hospital has more than $100 million in reserves.
Paying down some of its debt will bring the hospital into compliance with its revenue bond agreements. Because the hospital is anticipating a loss this year, Meyers said, "We're in danger of violating some covenants in our bond issues. One of the ways to take care of that is to pay down other debt."
The revenue bonds were issued in the early 1990s. The bond covenants require a certain level of hospital profitability every year. "If we fall short of those, there are things we have to do to make up the difference and that debt formula includes how much debt service we'll have in future years. So by paying down some of the debt, we'll reduce the future debt service and bring ourselves back into line with the covenants," he said.
Asked if he anticipated a reduction in the 1,400 full- and part-time workforce, Meyers said he did not.
"We do know that our staffing has grown the last few years," he said. "What we're doing as we develop the budget is carefully scrutinize all the positions for which we're recruiting. We're going to be looking at every position that comes vacant to determine case by case, is this a position we can do without? Can we consolidate this job into something else?
"Mostly by attrition, we anticipate reducing our staff a little bit," but not a lot, Meyers said.
The larger issue, Meyers said, is reducing overtime and continuing to cut down on contract -- or temporary -- labor.
On the subject of hospital employee benefits, Meyers said the basic health plan covers the employee with no premium, but they have to pay the deductible and a co-insurance fee if they use services.
"Then we have other options where they can pay a little more and get a little richer plan," he said. "We anticipate that will continue to be the case next year, but the premiums they pay for the richer plans are probably going to go up. We're going to look at minor increases in co-insurance and deductibles, but nothing at all like what's happening in the rest of the industry."
Ruth Campbell can be reached at ruth@mrt.com.
The hospital has implemented several new programs to alleviate losses seen through the first nine months of the year, including:
-Requiring upfront payments for elective admissions and outpatient procedures.
-New collection strategy starting Aug. 1 to improve cash flow.
-Re-negotiating multiple managed care contracts to assure they reflect costs associated with delivering care.
-Improving internal processes to assure a patient's bill is filed with their insurance company in a timely manner.
These programs have been considered in creating the 2009 fiscal year budget and are expected to generate a minimum of $7 million in improvements.
Source: Backup material from hospital board meeting.
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The following are comments from the readers. In no way do they represent the view of mywesttexas.com.
Concerned Citizen wrote on Jul 31, 2008 12:38 PM:
" Why do the losses at this hospital continue to be a problem? The two hospital in Odessa have grown considerably without losing money. Do we have the right team in place to run our precious hospital? "
Charlotte wrote on Jul 31, 2008 12:51 PM:
" In my personal experience with the hospital they could start by actually trying to get correct information from the patients they are seeing. Getting correct information would be a huge frist step!!! You can't collect anything if all of the information you are starting with is wrong. "
bob lester wrote on Jul 31, 2008 12:51 PM:
" God bless MMH. It has taken a beating I know. And thank God for an administrator that is willing to work with and find solutions so everyone may receive medical treatment. Death and Taxes evade no one and they do not discriminate. Let us put behind us the stagnation of uninsured, indigent, or whom ever is in need but cannot afford it.. Let MMH never be anything like the place that let the woman lie in the ER and die. I am proud of MMH, the professionals that work there and their goal and mission of equality fo all. MMH has saved my life more than once and I am grateful. Bob Lester..a proud MMH patient on a recurring basis. "
Sick and Tired of This wrote on Jul 31, 2008 9:12 PM:
" MMH needs to get rid of all it's management and start fresh.
No more third billing to parties that have no idea of who MMH is billing them for.
No more emergency room services to no pay bums when they don't have an emergency. Refer non life threathening patients to a list of doctors in Midland.
Get the damn kids and these family reunions out of the waiting rooms. "
No more third billing to parties that have no idea of who MMH is billing them for.
No more emergency room services to no pay bums when they don't have an emergency. Refer non life threathening patients to a list of doctors in Midland.
Get the damn kids and these family reunions out of the waiting rooms. "
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Taxpayer wrote on Jul 31, 2008 7:45 AM:
When it is not an emergency, people should be referred to a list of the doctor offices in town.
Stop third party billing when you do not have the third party down there in person with legal picture id to prove they are the third party and showing they will pay for someone elses expenses.
MMH needs new management. Clean up the admininstation.
Stop all these family reunions and picnics that go on in the waiting rooms.
Stop all these kids running wild without parental supervision. If the parents don't control their kids and keep them in a chair and quiet then that should be child neglect.
Clean out of loafers that have no where else to go. Send them to the park next to the court house. Let them sit and sleep there.
MIdland is becoming a third world country fast.
It's the home of bums and loafers that won't take responsibility and pay their own ways.
MIdland Texas, if you don't want to take responsibility and want to live on handouts and wellfare them come here.
IF you are responsible you will be expected to pay their way.
MIdland Texas the home town of GWB.
You are sending us down the drain as fast as he is sending the country down the drain. "