By Rich Heiland
Free Press Publications, LLC
For Walker County News Today
FOR THE TIME being only one suitor remains to take over operations of the beleaguered Huntsville Memorial Hospital.
Michael Morgan, interim CEO of the hospital, told the Walker County Hospital District Board of Managers at a regular meeting Wednesday that one company dropped out because it just purchased four Chicago-area hospitals and is buried in transitioning those to its ownership.
Morgan is managing the hospital through his firm, Hospital Management Partners which was hired by the contract operator Walker County Hospital Corporation. He said originally 39 hospital companies responded to calls for involvement and nine signed disclosure agreements, meaning they could examine the hospital books.
That, he said, is now down to one.
“The CEO (of that firm) is working with their counsel on a sale process,” Morgan said. “Sale” would mean purchase of the land, building and assets. If, however that firm would drop out, Morgan said it’s time for a “Plan B.”
“A ‘Plan B’ would not include a sale process,” Morgan told the board. Most likely it would involve some kind of lease similar to what is in place now but not with the current operator, WCHC.
He said such a plan would involve lawyers for both boards, both boards themselves working together.
Board member Dr. David Toronjo asked Morgan how much it took to run the hospital, absent payroll, for a week. Morgan said a non-payroll week would require $1.3 million and with payroll,“$1.5 million.
“So, that is $6 million for 30 days?” Toronjo asked. “Isn’t that on the ‘skinny’ side?”
Morgan said it could be. In a later discussion Toronjo pointed out the hospital district has reserves of $14 million and said it’s easy to see how quickly that would be gone through should management of the hospital fall back on the district, pointing out the need for the “Plan B.”
Morgan told the board a significant loss of revenue, totaling roughly $11 million, is compounding problems. Most of those are hitting all hospitals in Texas.
Morgan said one big hit, and one obstacle to a firm agreeing to purchase or manage the hospital, is Blue Cross Blue Shield of Texas. Morgan said the firm is running behind on reimbursing hospitals, in part because it says it has been swamped by a new contract managing state of Texas benefits.
A year ago Blue Cross took over administration of the state health plans under a six-year, $281.2 million contract awarded from the Employees Retirement System of Texas. Blue Cross and Blue Shield won the contract by underbidding United Healthcare Services Inc., which has administered the plans since 2012. It also has other state contracts it took over from Humana.
But, Morgan said, the delay is not the only issue with Blue Cross.
“We had not had a rate increase in three years so we went to them and told them we needed a rate increase. So, they increased our in-patient care a little bit, but then decreased our rates for out-patients, resulting in a net reduction of 2.5 percent. This was not just us, but other hospitals as well,” Morgan said.
THE STATE OF Texas declining to participate fully in Medicare also is having an impact on HMH and hospitals around the state. WCHD Administrator Ralph Beatty, former HMH administrator, took an “editorial moment” to comment on the Medicaid issue.
“I was in Arkansas recently doing some work and that state is participating fully. There have been no hospital closures in Arkansas,” Beatty said. “But, if you look at the contiguous states that have not participated, all of them are experiencing the closing of small hospitals.”
On the bright side, Morgan said there have been improvements on both expense and revenue sides of the ledger. He said the closing of remote clinics is having a positive impact and many patients served by those are coming to the hospital’s Rural Clinic located on-site. He said neo-natal care, through an arrangement with physicians, for Medicaid patients is growing. To receive reimbursements the hospital needs to reach and maintain 60 patients and has quickly moved to 30.
On another front, Morgan said the hospital would need to first installment of funds granted by the district on Dec. 1. The board previously approved a $2.9 million advance to the hospital. Of that roughly $1.7 million represents back rent. In an accounting move, the district gives that money to the hospital, then the hospital uses it to catch up on back rent payments to this past July. That money then is used by the District to send in for a Federal reimbursement 2-1 match that will return between $3 million and $4 million.
Morgan said that influx, and the remainder of the funds, should put the hospital on an even keel cash-wise by after the first of the year. He said the hospital should maintain around $1.9 million at any given time to meet daily, weekly needs.
(NOTE: There will be a second story on the meeting tomorrow covering other items and discussions)
Rich Heiland, former publisher of the Huntsville Item and owner of Free Press publications, LLC, a reporting/writing firm working with media, has been a reporter, editor and publisher at several daily papers. He was part of a Pulitzer Prize winning team. He taught journalism at Western Illinois University. He can be reached firstname.lastname@example.org or 936-293-0293.