ILWACO A sickly economy coupled with slow reimbursements from insurance carriers is causing a cash crunch at Ocean Beach Hospital and Medical Clinics.

The hospital is working its way back to a sounder financial position. OBHs locally elected board planned to discuss related issues at their regular meeting Tuesday afternoon. The Observer will carry a report on those talks in next weeks edition.

As of last Thursday, OBH had $4.77 million in accounts receivable unpaid bills that it is owed by patients, insurance companies and government agencies. The hospitals typical outstanding balance rate runs between $3.5 to $4 million.

Insurance companies in general have been slow to pay, and Medicare, in particular, has been especially lethargic with reimbursements, according to hospital spokesperson Alan Craft. 

Medicare is the primary insurance carrier for 85 percent of the hospitals inpatients, and 60 percent of the patients who have established care with one of the healthcare providers in the hospitals three medical clinics, Craft said.

In addition, the hospital has seen a sharp increase in self-pay patients those without insurance, as well as those with large copayments over the last five months, which equates to dwindling cash reserves, Craft said.

Slow reimbursement rates and outstanding balances began taking a toll in early July. 

Our chief executive and chief finance officer, as well as our entire management team, are closely monitoring the situation, said Craft. Our board of commissioners is fully apprised and receives daily updates regarding cash balances. This is obviously a matter of tremendous concern. 

Like most organizations, hospitals are not immune to the effects of a sluggish economy, Craft added. To a certain degree, we are in a convergence zone a perfect storm, he said. There are fewer people with means to pay, and longer times between payments from insurance companies that are far less eager to reimburse for claims. Add to the equation the gap in two crucial service areas (see below) and you begin to see the financial challenges we face.

A widespread problem

This is not a unique scenario, as many hospitals and clinics of all sizes across the state are beginning to feel a cash strain from the economic slowdown, according to Jeff Mero, who heads the Association of Washington State Public Hospital Districts. 

These are very challenging times. The number of underinsured and uninsured people has skyrocketed, while the reimbursement rates for programs like Medicaid and Medicare limit what hospitals are paid, which is leaving many of our member hospitals facing cash shortfalls, Mero said. 

Rural hospitals experience this in extreme because there is no margin generated through subsidized health insurance, and most rural communities have few large employers that offer private insurance, Mero said. There are more than 50 public hospitals in the state. 

Treating the problem

The hospital is carefully examining expenditures, eliminating travel for staff and reducing overtime. It has also opted to leave a number of vacant positions open until finances stabilize. This affects support and administrative positions, and not positions directly related to patient care.

Another area impacting the hospitals cash flow was the temporary lapse of orthopedic and general surgery two critical services. 

Orthopedic Surgeon Dr. Jessop McDonnell left the hospital in early May, but did not see patients for several months prior to his departure.

The hospital has filled the void in its orthopedic program by hiring Dr. Ron Teed, who began seeing patients in late June. Dr. Teed has been extremely productive and very popular with patients. Now, were playing catch up, as it takes time to establish a practice and time for services rendered to cycle through the system and generate revenue, said Craft. 

The hospital also has a new general surgeon who arrived on Monday.

Surgery is a huge revenue stream for the hospital because it drives volume in other ancillary services, such as diagnostic imaging and lab work. When surgery disappears from the radar it creates a vacuum in other areas, said Craft.

Big strides in recent years

In recent years the hospital has made aggressive strides to increase the level of care available locally. Ocean Beach has the only fulltime cancer care program serving residents on the Peninsula and in Astoria and Seaside.

Other advances the hospital has made include opening the Womens Health Center, adding nuclear medicine heart stress testing to its cardiac rehabilitation clinic, and implementing a nationally recognized stroke program. It has also invested heavily in upgrading diagnostic equipment and facilities. 

Our leadership is taking prudent measures to ensure we continue to provide the very best care for our community. Fiscal stability is one of the core underpinnings of that commitment. The finance department is scrutinizing ways to streamline the billing process and improve turnaround time on accounts receivable.

The rebirth of our surgery services, of course, will go a long way toward providing a cure for our cash flow ills, he said.

Ocean Beach Hospital is a 25-bed critical access hospital that also operates three medical clinics, including the Womens Health Center and a satellite clinic in Naselle. Critical access hospitals are those designated by the federal government as serving a rural population that has limited access to other healthcare facilities. The organization employs approximately 170 people.