Sitka Community Hospital isn’t out of the red yet but things are improving, CEO Rob Allen says.
Allen has been managing the hospital since the previous CEO resigned abruptly in late 2014, leaving the hospital in need of a $1 million loan from the city.
Speaking at the Chamber of Commerce luncheon Wednesday, Allen said finances at the city-owned health facility are improving.
“Pretty much in all our numbers, we’re better than last year,” he said.
The hospital’s cash-on-hand has more than tripled from last year, for instance, moving from $1.4 million to $4.6 million.
“That’s 74 days of cash on hand versus last year, 19 days,” Allen said.
The hospital probably will still record a loss for the fiscal year ending June 30, but in the range of the $500,000 that was projected at the start of the year, Allen said. And a number of changes have the hospital looking better in the short-term, including the speed at which patients are paying their bills, he said.
“Last year it was taking us around 63 days to get paid (on average) and now we’re down to around 42 days, which is much closer to industry standard,” Allen said.
Additionally, one of the bigger holes in the hospital budget appears to be closing. Charity care, for which the hospital receives no reimbursement from either the patient or insurance, cost the hospital $500,000 last year. By this time of the year in 2015, the hospital had already lost over $300,000 on charity care. By the end of this March, that number is only $55,000.
“There has been a big swing in charity care,” Allen said.
One reason may be a new policy put in place for charity care, but Allen said he thinks the biggest factor is Gov. Walker’s decision to expand Medicaid in Alaska — a provision made possible by the federal Affordable Care and Patient Protection Act of 2010.
“I think when we really drill down, that’s going to be the main reason,” Allen said.
For one, Allen said the hospital can now sign patients up for Medicaid as they come in, rather than treat them without coverage. So far they’ve done that with 29 patients, Allen said.
As for the city’s $1 million loan to the hospital, Allen said $100,000 of that has been paid back, and the hospital is hoping to make another large payment later this year.
“We’ve paid back $100,000 of that and my plan is we’ll pay down about $400,000 of that this fall,” he said.
Still, the hospital is facing continuing challenges. Income is down about $700,000 more than anticipated, and Allen said that another one of the principal factors that led to the hospital’s financial struggles is still causing problems.
The electronic health records system that the hospital selected to manage all patient records has not worked, Allen said.
“We just got the wrong system and we did not have a good implementation,” he said.
He said that after he came to the hospital there were new efforts to make the system work, but new problems arose that led to the decision to start over.
“It’s so imperative to have that system work properly for everything we’re doing, and we can’t mess that up,” he said.
Finding a new system is expected to take two to three months, and up to a year to implement, Allen said.
He concluded his presentation by discussing efforts to better partner with SEARHC Mt. Edgecumbe Hospital. The two hospitals put out a request for proposals for a consultant to look into the effort, and ECG Management, a national company that focuses on health care, won the contract. Allen said that report will be vital to the long-term success of the hospital, as funding looks tighter at the state level.
“There’s a lot of talk in the Legislature about Medicaid reform and what can be done, which means to cut, basically,” Allen said.
Medicaid funding accounts for over a quarter of hospital revenue. One of the sources of local funding for the hospital, the Sitka excise tax on tobacco products, took an interesting turn last August.
After the Assembly doubled the local tobacco tax there was a surge in sales to smokers who wanted to stock up before the new tax took effect, Allen said.
The hospital had been getting around $30,000 to $40,000 a month in tobacco tax, but in the period between the time the higher tax was passed and the date it took effect, it took in $300,000.
“That’s thrown off our entire revenue for tobacco tax,” Allen said.
The windfall was added to last year’s budget, but Allen said once it’s all added up the numbers are about on track with what was expected.
