CRH on Track to Regaining Financial Stability

By Lura Jackson

 

After a tumultuous year in 2017 that saw the closure of its obstetrics unit, Calais Regional Hospital [CRH] is on the path to regaining financial stability. The hospital, which was facing significant deficits as a result of a combination of a low Medicare allowable costs rate, rising costs, bad debt, and free care, has been in the process of restructuring its services and pursuing the clients with the largest amount owed, including the Veterans Administration [VA]. 

The hospital’s first order of business last year was to consider what services it could offer that would fall under Medicare’s allowable costs. Per Erica Marshall, VP of Clinical Operations, the obstetrics unit is not generally covered under Medicare because so few women giving birth were covered by it. Even if mothers were covered by Medicaid, Medicaid did not cover some costs, such as the on-call surgery team. For the past twenty years, the hospital was able to absorb the costs of the obstetrics unit from other profitable service lines, but that became an impossibility in the face of decreasing profits and rising debt. 

Prior to closing the obstetrics unit, the hospital was at an allowable costs Medicare reimbursement rate of 38 percent, compared to a national average of 72 percent. “We didn’t have enough commercial or private payers to fill those gaps,” explained Dee Dee Travis, VP of Community Relations when the hospital announced the closure of the obstetrics unit.

An evaluation of potential service lines that would fall under allowable costs for Medicare led the hospital to the decision to expand its pulmonology department, along with its sleep lab – a shift that began at the end of last year with the hiring of Dr. Francis Lee. A triple-board certified doctor in pulmonary, sleep, and internal medicine, Dr. Lee’s approach is targeted at improving chronic conditions and ideally reducing emergency room visits. “There is a large role that sleep medicine plays in what CMS [Centers for Medicare and Medicaid Services] likes to call ‘population health management.’ In other words, we can improve the quality of health in the community with preventative measures so they don’t wind up with more catastrophic issues,” Dr. Lee said.

Aside from restructuring its services, the hospital called on municipal leaders and legislators to assist it in collecting its significant bad debt, some of which is owed by the VA. CRH is not the only hospital with outstanding debt owed from the VA, something that US Representative Bruce Poliquin has called out directly. “When I first learned of the millions of dollars of outstanding payments owed to our hospitals in Maine by the VA, I was shocked and knew we needed to immediately take action,” Congressman Poliquin expressed in a press release. “For many of our rural, local hospitals, completing these outstanding payments is extremely important, not just so our Veterans can continue to receive care closer to home, but so our hospitals can get these much-needed payments and revenue and can continue to provide for the local communities they serve.”

With the assistance of Poliquin and Susan Collins, the most overdue payments owed by the VA have been reclaimed by CRH, Travis said. However, the timeliness of payments has not been affected and more and more accounts are falling behind. “The older outstanding claims are getting cleaned up, but the VA continues to have accounts get to the point of being very dated before payment is received,” Travis said.

All in all, Travis describes CRH as making progress towards financial stability, although she expresses that “we are not out of the woods yet.” To help start 2018 with a clean slate, the hospital booked a large amount of overdue and uncollectible debt into its 2017 finances, which inflated the hospital’s losses for last year. Doing so gives the hospital a realistic assessment of the standing of its accounts receivable department. “Hopefully, as we carry on through our service line reviews and continue to make the needed changes and adjustments, 2018 will see us running where we need to be and able to maintain it.”