Veterans Memorial Hospital reports strong February

by Brianne Eilers

The month of February proved to be one of the best months of the fiscal year for Veterans Memorial Hospital (VMH) in Waukon, with a net income of $49,730. Skilled patient days were up slightly, while acute patient days were down 14.7% from this time last year. Inpatient revenue was also down, but expenses have been kept in check as well, which has helped to make it possible to have a positive bottom line.
VMH put a wage freeze into effect at the beginning of the fiscal year, and it is estimated that if that hadn’t gone into effect, the hospital would be showing a $125,000 loss.
VMH has cash reserves at $1,426,000. Days in accounts receivable have climbed to 84, but the hospital is working to get that back down. There had been an open position in billing, as well as in home health, but the positions have since been filled. VMH Administrator Mike Myers said that they are now “hitting their stride” and that VMH is collecting again and getting those bills off the books.

VMH is looking ahead to the next fiscal year, including wages. They have four different scenarios, which have been discussed by the board and staff, for how wages will be dealt with. Myers explained that the final decision will be made in April as to which way VMH will go. If the hospital is at a loss or has a less than 1% profit margin, wages will be frozen. From that point it goes up from there, depending on the profit made.
VMH had open forums on the matter and discussed health insurance premiums with employees also. “There is really no mechanism to control the rising costs of health insurance,” Myers noted. VMH spends about $1 million per year on health insurance for employees, and Myers explained that for every 10% increase it adds $100,000 in expense. They will be monitoring the situation closely, as rising health insurance costs are something that many businesses and individuals have been concerned about lately.
In other matters, VMH received approval to make some changes on how costs are allocated for Medicare. They have been one of the first hospitals in Iowa to do so. Due to the way that Medicare reimbursements have been received in the past, combined with certain requirements for allocation of overhead funds, some costs were not covered by Medicare. Now, with the new allocation system, it should add about $40,000 to the bottom line, by allowing more costs to be reimbursed.
Blue Cross/Blue Shield has done some recalculations of their formula for outpatient payment, which should give VMH an additional $100,000. Myers noted that this outcome should not be expected all the time. “They use a formula so they can tweak it,” Myers explained, “and it will be adjusted on an ongoing basis.” Prior to the recalculation, it looked as though VMH would have owed $38,000.
VMH will be putting up another Donor Wall, which will be located adjacent to the capital campaign wall in the lobby area. Anyone interested should contact the hospital at 563-568-3411.

Myers also weighed in a little bit on the Health Care Reform bill that has been passed. He explained that while the intent of the bill was to cover more people, the penalties for not having insurance are very low, and many will probably find it less expensive to pay the penalty, rather than pay insurance premiums. “There are some big areas of concern in this bill,” he noted. Myers said that the whole initiative for healthcare reform was the unsustainable costs, and this bill still does not make much in the way of provisions to control costs, nor is there a provision to control health insurance premiums.
He did point out that one part that may be appealing to Iowa is the geographic variation, which would equalize Medicare payments among the states. Iowa is usually lower paid in terms of per beneficiary.