Bartlett Hospital to raise rates

City-owned facility posted big losses in 2012 and 2013

Bartlett Regional Hospital will increase rates by 5 percent across the board beginning July 1.

 

The increase was approved Monday when the City and Borough of Juneau Assembly finalized its budget for the next fiscal year. Hospital administrators said they’ve not yet decided how the increase will adjust the cost of procedures at the city-owned hospital.

“The specific charges on a service-by-service basis have not yet been determined,” hospital spokesman Jim Strader said in an email. “We are currently developing a strategic pricing structure to remain as competitive as possible with other hospitals in Alaska and Seattle.”

Bartlett administrators was unable to meet with the Empire to discuss the hospital’s budget in detail despite several requests in recent weeks. The hospital instead emailed responses to questions.

The hospital’s FY 2015 operating budget was approved at $85.4 million, with a projected net income for the year of $2.4 million. The projected 2014 operating costs are $81.3 million, with a net income of $6 million.

Bartlett will have made about $4.4 million through hospital operations in FY 2014; it budgeted for $1.8 million. The budget predicts $881,899 in hospital operations income in FY 2015. In FY 2012 and 2013, the hospital lost money in its operations, finishing 2012 with a loss of $2.1 million and 2013 with a loss of $776,557.

At the beginning of FY 2014, the hospital paid out almost $300,000 in severance to three top managers who resigned. It recently hired a new CEO, Chuck Bill, whose salary is $315,000 per year, plus a signing bonus of $31,500 and relocation compensation of $31,500. Bill started work at the hospital about a week ago. Former CEO Christine Harff made $260,000 per year and received a relocation package of $23,027, according to her employment contract.

In FY 2014, as of the end of March, the hospital received $12 million in federal Medicare money and $10.5 million in state Medicaid money. It received $39 million in third-party insurance money. Patient payments to the hospital came out to $3 million.

Strader said the coming rate adjustments mean hospital patients will see some rates increased and others reduced to “remain well-aligned with Medicare fee schedules.”

According to a report from the hospital, it sees about 599 Medicare patients per year and charges about $26,338 per case. Adding 5 percent would raise that to $27,655 per case.

That’s far lower than six competing hospitals in Fairbanks, Anchorage, Soldotna, Palmer and Seattle, which charge an average of $50,654 per Medicare case, according to American Hospital Directory numbers. The full breakdown can be found on page four of this online document: www.juneau.org/clerk/ASC/FC/2014/documents/BRHFY15BudgetPresentation.pdf.

Competition among hospitals has led to a steady decline in surgeries performed at BRH during the past five years. In FY 2010, 3,575 surgeries were performed. This year, the hospital performed about 3,068 surgeries. The problem, in some situations at least, is the hospital “may be charging so much that people are going out of town,” said city finance director Bob Bartholomew.

Interim hospital CFO Alan Germany told the Assembly Finance Committee April 30 that patients turning elsewhere for procedures is one reason for the rate increase.

“There is some pricing pressure from hospitals in the Lower 48, especially for elective procedures like a colonoscopy,” he said. “This is an area where BRH might benefit from strategic pricing.”

Rates at the hospital have increased incrementally over the years. All services’ rates increased by 10 percent in 2009, by 7.5 percent in 2010 and again by 7.5 percent in 2011. They’ve increased sporadically since then.

This year’s 5 percent increase — which are expected to raise $1.2 million for the hospital — will go toward rising costs of labor, benefits, supplies, transportation, utilities and physician calls, Strader said. Physician call pay was increased by $382,000. Staff salaries increased by 2 percent over FY 2014, and employee health insurance costs rose by 10 percent. Germany said the cost increase, which amounted to a budget impact of $609,000, was higher than that of other CBJ employees because of BRH staff’s proximity to and higher use of hospital services.

The hospital anticipates adding six positions in FY2015: an emergency department registrar, physical therapist, reporting analyst, pharmacist, coding manager and financial analyst. According to a report from the hospital, adding a physical therapist will cut down on patient wait time — 31 people are waiting to be seen by a therapist, some of them for over a year.

Utility and supply costs for the hospital have increased by 1.5 percent over FY 2014, the BRH report stated.

The hospital’s bad debt — money owed by patients that isn’t paid — will stay flat at $12.2 million. This is because of a new definition of what qualifies as “charity care,” Germany said at the April 30 meeting. An increase in charity has kept the bad debt stable, he said.

The hospital has a total cash balance of almost $45 million, but that is spoken for in different ways. Of that balance, $24.3 million is an operating cash reserve — enough money to run the hospital for 148.8 days.

About $14.9 million is a board designated fund balance, of which about $13 million is allocated for upcoming improvements to the hospital. And $5.5 million was appropriated from CBJ for a new Child and Adolescent Health Unit, a project that’s still on the drawing board.

The remainder of the $45 million cash balance is the hospital’s bond debt service reserve — enough so that “if something went wrong they could pay their bonds for a year,” Bartholomew said.

As an enterprise fund like Docks and Harbors or Eaglecrest Ski Area, the city-owned hospital is largely responsible for footing the bill for its own capital improvement projects, he said.

The Assembly only finished its FY 2015 budgets Monday night, having balanced a $6 million deficit. But with the city facing a $9 million deficit in FY 2016, the Assembly will begin meeting this summer to start its balancing act once again.

While “there’s not a legal restriction” to dipping into Bartlett’s balances to fix the city shortfall, it wouldn’t be sustainable, Bartholomew said. With a quick fix, the city would soon be right back where it started.

• Contact reporter Katie Moritz at 523-2294 or at katherine.moritz@juneauempire.com.

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