Quincy Hospital Works to Address Revenue and Financial Issues

QUINCY, Wash., April 14, 2014 /PRNewswire/ -- Quincy Valley Medical Center (QVMC) Commissioners are considering seeking a multiyear Maintenance & Operations Levy in 2014 to help resolve the Hospital's budget issues, but have decided not to ask voters for a levy "Lid Lift."  QVMC Administrator Mehdi Merred said the Hospital District is considering other options (than a Lid Lift) after meeting with Grant County Assessor Laure Grammer, who indicated that a Lid Lift might be a less effective option than anticipated.

The Washington Auditor's Office noted the Hospital's precarious financial situation in its recently released annual audit.  According to the audit report, the Hospital owed Grant County about $3.5 million in registered warrants at the end of 2013. Warrants are issued by a County when a taxing district (like the Hospital) doesn't have enough cash on hand to meet its obligations. The money is paid back, with interest.

To help resolve this situation, QVMC Administrator Mehdi Merred said Commissioners are considering the Hospital District's options to address its revenue challenges. 

In order to address the bad debt and collections problems, QVMC has taken a proactive approach to control internal administrative and operational expenses. It has been very successful in keeping internal expenses under budget. For example, in 2005, the Hospital went through a "reduction in force" to eliminate unnecessary administrative and operational expenses. Additionally, QVMC has continuously assessed the profitability and growth potential of its service lines and, on some occasions, eliminated service lines that had been unprofitable. The conservative cost management system has allowed the Hospital to record four years of positive net income since 2007.  Prior to 2007, the District had not experienced positive net income in over 25 years.

QVMC has also instituted various internal processes and procedures to streamline and improve cash collections. In particular, QVMC has made the following changes over the past year to increase collections:

• Hired a new Business Office Manager with very strong collections experience;
• Restructured its charity care policy and has implemented a more comprehensive and consistent process to determine eligibility;
• Created a registration department to immediately capture patients' ability to pay and set payment options while patients are on-site;
• Is charging interest on delinquent accounts.

However, despite QVMC's increase in patient volumes and implementation of programs to successfully control and/or decrease typical internal administrative and operational costs, the Hospital did not show a profit for 2013, and QVMC's debt to Grant County is continuing to increase.

"The Hospital continues to treat more patients every year," Merred stated. "Unfortunately, the charity care and bad debt expense percentages continue to grow significantly because many patients don't or can't pay for the care, requiring the hospital to send the bill to a collection agency. The Hospital might collect 10 cents for each dollar the patient owes, if the person pays at all.  In 2013, the Hospital recorded $1.764 million in bad debt and charity care, approximately 12 percent of gross revenues," he stated. 

A big area of concern for QVMC is the bad debt from people attending Gorge Amphitheatre concerts who need medical attention that are sent to Quincy Hospital's emergency room. QVMC officials recently met with the Grant County Commissioners and a representative from Live Nation on April 2^nd to talk about the huge strain the Gorge Amphitheatre places on the Hospital and to find a solution to recover costs from unpaid medical bills and additional staff as a result of hundreds of concert goers coming to the Hospital's emergency room every summer. During the meeting, the Hospital's Chief Financial Officer Dean Taplett explained that last year's concerts resulted in over $100,000 in additional staffing costs and about $300,000 in unpaid bills. Taplett also indicated that a significant portion of its roughly $3 million debt to Grant County has been from the additional costs created by Gorge Amphitheatre concert goers. 

Under federal law, as an emergency department, QVMC is required to serve anyone who comes through its doors.  The Hospital normally treats approximately 10 patients per a day in its emergency room.  "However for some concerts, the Hospital can have between 40 to 60 patients come to the emergency room per day," Merred said. "That means we have to prepare for the large extra influx of patients, which greatly increases our variable costs."  Merred commented that the Paradiso Festival at the Gorge Amphitheatre last summer resulted in nearly 100 people being transported to the Hospital's emergency room during the 2-day event. 

It was noted at the April 2^nd meeting that Live Nation compensates the Grant County Sheriff's office for providing law enforcement services at the Gorge Amphitheatre, so there is already precedent for Live Nation to provide reimbursement or cover the additional costs incurred by a local agency.

While recent economic growth in Quincy has contributed to QVMC receiving more property tax revenues, QVMC is a junior taxing district; therefore its tax revenues are statutorily limited. Over the last three years, the increase in our property taxes has not kept pace with the increase in Hospital's bad debt.  On a related note, even though Live Nation's Gorge Amphitheatre generates some sales tax revenues from its concerts, most of the sales taxes go to Grant County and none go to QVMC.

As a result, in addition to looking at a possible Maintenance & Operations Levy Increase, as well as seeking compensation for the costs of Gorge Amphitheatre concert goers who are using QVMC for emergency medical services and are not paying for their treatment, Quincy Valley Medical Center is also pursuing the following other options to help resolve its financial issues:

• Grant County currently holds the warrant or guarantee on the debt that QVMC has accrued. In order to spread out some of the financial burden, Grant County Treasurer Darryl Pheasant is requesting the Hospital District approach City Officials to transfer some of the warrants to the City of Quincy.  Pheasant has indicated that the City would receive a better return from the warrants than other investments available to them.
• QVMC is also working with a local accounting firm and various lenders to consolidate debts and/or refinance loans under a lower interest rate. 

Given that Quincy Valley Medical Center employs nearly 100 people, contributes over $13 million annually to the local economy and is one of the top 4 employers in the Quincy community, Quincy area leaders all agree that it is very important for the Quincy Valley's continued growth and well-being that immediate and reasonable steps need to be taken to help improve QVMC's financial and operating situation.

For more information, contact Michele Wurl, Director of Marketing & Public Relations of QVMC at 509-787-5349 or Email.

Read more news from Quincy Valley Medical Center.

SOURCE Quincy Valley Medical Center