Letter to the Editor: Continuing to work to assure the long-term viability of VMH

To the Editor:

This letter is in response to Mayor Pat Stone’s column in the July 24 issue of The Standard.

As a councilman for Waukon, I have been involved in the monitoring of the developments related to the economic situation with Veterans Memorial Hospital since I took my seat just over a year ago. The hospital is in the midst of a several year financial downturn due to many different factors.

VMH’s financial struggles are not foreign to critical access hospitals. VMH has outperformed other critical access hospitals of similar size and type. That level of hospital is averaging -10% outcomes on their budgets.

Fortunately, the majority of the council (Hatlan, Rausch and Ellingson) has shown a strong commitment to support VMH, its board, and staff through these times of struggle.

July 22 Hatlan, Rausch and Ellingson voted for the continuation and refinancing of a $750,000 loan the City guaranteed for VMH last year. This emergency meeting July 22 had to be called by the three councilmen after Mayor Stone refused to sign the loan documents despite the council passing a resolution July 1 approving the same measure.

The consequences of the councilmen not calling the special meeting would have been catastrophic for the daily operations of the hospital. The mayor’s refusal to sign the loan would not have resulted in VMH paying off the $750,000 note. It would have resulted in the City defaulting on its own loan.

VMH employs 223 people with a gross payroll of 9.5 million dollars. The Iowa Hospital Association estimated VMH had a direct and indirect 14 million dollar impact in our local economy. They also contribute $150,000 in generated sales tax. This hospital allows the men and women of our community to have full-time employment, health insurance and a public retirement pension and it allows their significant others to work in ag, construction and other work sectors without those benefits.

The City of Waukon does not directly subsidize VMH’s general fund budget. That is in contrast to the Winneshiek Medical Center, which has been subsidized nearly ten million dollars in the past few years by its local government entity.

Financial struggles at VMH the last three years are directly related to the same issues affecting all rural American hospitals. The next three paragraphs lay out just a few examples of the financial stressors:

In 2016 privatization of Medicaid by the Iowa Legislature resulted in the managed care organizations (MCOs) delaying and reducing medical reimbursements by several hundred million dollars to Iowa Rural Hospitals.

Iowa has one primary private insurer, Blue Cross-Blue Shield (BC-BS). BC-BS has recently reduced its reimbursements again. BC-BS has a universal contract with all hospitals. This means small hospitals like VMH with lower volume are paid the same as high volume and lower overhead facilities.  BC-BS now frequently pays less than Medicare/Medicaid.

We have lost four prominent physicians (Venteicher, Schwartz, Nesseim and Ross) in the last couple of years and the medical providers, Mayo and Gundersen, have not been able to replace them due to a shortage of rural physicians. These well-liked providers pumped a strong stream of dollars into VMH through OB, rehab, lab and other service referrals.

Mayor Stone highlighted other concerns, such as the ambulance service. VMH and the City ultimately subsidize a large area of the county and townships with ambulance service. VMH ambulance responds to calls in our county’s small communities who find it ever more difficult to man ambulance crews 24/7.

In Mayor Stone’s column he wrote a paragraph stating he, councilman Decker and I asked for VMH Administrator Mike Myers’ resignation at a hospital board meeting. This statement is not true. This councilman has not made personnel demands of the hospital board nor demanded Myers or any other staff be fired.

This financial situation of VMH is very complex and a strategic solution is being developed through a complete financial review by the recently hired hospital CFO.  I have confidence in the hospital board’s ability to make the best decisions for the long-term health of our hospital. The board’s work on such a complex issue is one which should be appreciated by our community.

In summary, this councilman, with the support of councilmen Hatlan and Rausch, will continue to work with Administrator Myers, the hospital board and all Allamakee County residents to assure the long-term viability of VMH.

Councilman John Ellingson


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