for Healthcare to Thrive, not just survive.
DID YOU KNOW?
83% of critical access hospitals in the state of Kansas receive tax support. Hiawatha Community Hospital is a critical access hospital that does not currently receive tax support.
DID YOU KNOW?
A half cent sales tax equals to only an extra .50 cents for every $100 dollars you spend on items subject to sales tax. That is just 2 Quarters for every $100 dollar bill you spend.
DID YOU KNOW?
The half cent sales tax for healthcare equals to about $51.66 per household, per year! How do we know this? Well, according to a recent study, the average household income in brown county is $46,964, and on average spends 22% of their income on items subject to sales tax.
ARTICLES AND LETTERS
SALES TAX FAQS
IF APPROVED BY VOTERS, WHAT WOULD THE SALES TAX FUNDING BE USED FOR?
The sales tax support will provide access to funds for capital equipment and repairs. For the hospital, equipment or repairs that are over $5,000 is classified as capital expenditures. The hospital has limited funds to purchase these items which has resulted in our aging equipment failing. This year we have had more equipment failures and ongoing building issues.
Equipment failures this year include – xray machine, blood culture machine resulting in more tests being sent out for diagnostic reading, monitors in the surgery suite that limited the number of cases that could be done, laparoscopic equipment failure that delayed surgery, monitors in ER, and IV Pumps. CT has been down several times which means emergent procedures are sent to another hospital. Fortunately, through all of these failures, no patient was harmed but it makes it difficult for the clinicians to have the tools and equipment needed to provide care for the patients.
In hospitals, we do not have the luxury of always scheduling procedures and tests. We have to maintain a state of readiness for when the patients come into the hospital. Tax support is critical for allowing the hospital to have the funds available to purchase equipment and make these repairs. The budget is $1.5 million for the next three years - IF we have the funds available to purchase the equipment and to make the repairs. The key is that the tax support would provide 50% of the funds necessary. The rest of the funds will come from operations or fund raising.
WHY 10 YEARS INSTEAD OF 5 YEARS?
The hospital is pursuing 10 years because this allows the hospital to refinance our current bonds which saves interest expense and allows immediate access to $2 million to help meet our current capital needs. A ten year tax reassures potential physician recruits that we are focused on the future of healthcare thriving in Brown County. This is the best use of tax dollars.
Physician recruitment is critical as we know Dr. Julie has announced she is leaving next year. Two other physicians are leaving in two years. We need the community’s engagement to help with recruitment of our new providers like this community did for Dr. Bigham, The Rosas and Dr. Shamburg. Residents want to know who will be their family when they come to Hiawatha. We will need the help of the community to answer this question.
It is important to note that the tax support is targeted for capital equipment and repairs for our aging facility not for operations.
WHAT STEPS DOES THE HOSPITAL INTEND TO PUT INTO PLACE TO ENSURE THEY ARE ACCOUNTABLE TO THE PUBLIC, IF THE SALES TAX IS APPROVED?
The hospital will continue to provide monthly reports to the City Commissions, County Commission and more broadly to the county. The reports will include updates on operations, recruitment efforts and how tax dollars are being used for the capital equipment and facility repairs as well as the plan for the upcoming quarters.
HOW IS THE HOSPITAL’S CASH FLOW AND HAVE YOU BEEN ABLE TO CATCH UP ON PAYMENTS ON A LINE OF CREDIT TAKEN OUT IN OCTOBER OF LAST YEAR?
The hospital’s cash flow over the past year has improved. The hospital converted to a new electronic health record in September of 2018. Whenever that happens, it slows down the payment process during and following implementation while new processes are built and put in place. While the billing system is not perfect, we are capturing more charges and the billing and collections have improved. We are continuing to improve the billing processes.
I know some people have felt that since we were able to pay of our line of credit that we don’t need tax support. That statement is false. Let me explain another major factor that allowed the hospital to pay off our line of credit. In 2018 Medicare recouped too much money, during the last four months of 2018. After completing our cost report, Medicare sent us a repayment for 2018. One of the nuances with Medicare, who pays you based upon previous year cost (driving in rear view mirror) made a determination that since they underpaid us in 2018, they have underpaid us for 2019. Therefore Medicare deposited additional funds to catch up for 2019. The total amount of both those deposits is $652,000. We have used this to pay down our LOC. This is an interest free loan and allowed us to pay off our line of credit.
We anticipate paying this money back to Medicare next May. In every business increased volume and decreased expense is a win. In our Critical Access Hospitals, when you increase volumes and decrease expenses, you will owe Medicare every time.
WHAT STEPS IS THE HOSPITAL TAKING TO IMPROVE ITS COLLECTION OF PAST DUE ACCOUNTS?
Numerous improvements have been made since we started our Patient Engagement Department. Our main goal is to reduce the value of past due accounts as older balances become more difficult to collect on prior to referring to our collection agency.
Athena – our EHR program assists and sends out periodic automatic calls/text/emails reminding our patient’s that they have a bill due or past bill due in conjunction with statements mailed out.
We have implemented a Financial Counseling Program to offer assistance with identifying payment sources and work with patients to discuss payment options. We help with KS, MO, NE Medicaid, COBRA, Workers Comp, Auto Insurance, other Patient Assistance programs. We also offer estimates on services upon request prior to scheduling services to help patients better understand what their financial responsibility will be prior to having services done.
Point of Service Collection – Uninsured patients are referred to Financial Counselors first prior to scheduling to discuss cost of care and arrange a payment plan prior to scheduling. Our staff attempts to collect a large lump sum in advance to scheduling and/or setting up payment plans by offering our self-pay discount. This is a common practice in hospitals with self-pay patients, much the same way that insured patients receive discounts through their insurance networks.
Reviewing accounts prior to Collection Agency – We’ve developed a workflow to check all accounts eligible for referral to our collection agency to ensure all services were billed appropriately to patient’s respective insurance
We are working to implement point of service collection for co-pays for Radiology services in conjunction with patient’s insurance plans.
CAN YOU PROVIDE A LIST OF THE CAPITAL EQUIPMENT AND MAINTENANCE NEEDS AT HCH?
Please CLICK HERE to see a 3 year capital budget details over $4.5 million in necessary equipment replacements and facilities repairs.
WHY IS ALL OF THE TAX SUPPORT GOING TO HIAWATHA COMMUNITY HOSPITAL?
After visiting with many community leaders, and assessing the hospital’s financial performance and the overall capital needs of Hiawatha Community Hospital, it was recommended the entire tax support should go to the only remaining hospital in the county. Consolidating the resources will better ensure continued access to healthcare services for Brown County.
WE HAVE HEARD THE HOSPITAL IS DOING BETTER. WHY IS THE SALES TAX NECESSARY?
With the continued commitment to transparency the hospital provides monthly updates at the county and city commission meetings regarding the operations of the hospital. The hospital has improved operations which means that we are losing less money this year than the previous year. That being said, the hospital still has a negative operating margin so far this year. To put things into perspective, for the last 11 years the hospital had an average operating margin with a loss of ($978,000). This means with depreciation, a non-cash expense, there is a positive cash flow of $686,000. Then we have to make our annual bond payment of $600,000. That leaves $86,000 per year left over. This is why we have not had the cash for capital purchases and we had to deplete our cash reserves to replace equipment as it breaks or to do building maintenance and repairs when necessary. With these financial challenges in rural health care, this is why 83% of the critical access hospitals in Kansas have tax support.
WHY DOESN’T THE HOSPITAL TRY A CAPITAL CAMPAIGN TO RAISE THE FUNDS NECESSARY INSTEAD OF ASKING FOR TAX SUPPORT?
The hospital will be pursuing a three prong approach to meet the capital needs of the hospital.
First, improve operations – the hospital has already made progress on improving operations and continues to work to improve the bottom line. With the improvement made through seven months, the hospital is still operating at a loss and is generating enough cash to pay for the bond and day to day operating expenses.
Secondly, the tax support will help to meet the immediate and long term capital equipment needs. These capital equipment needs are the routine, ongoing capital expenses that will be used to replace aging or broken equipment and making repairs to an old building like replacing the roof and chiller system for the air conditioning on the older part of the hospital.
Thirdly, the hospital will be doing a capital campaign for the major renovation that is needed for medical/surgical unit, OB, and Emergency Department. Holton Community Hospital has recently been successful with their capital campaign for major renovation. The Hiawatha Community Hospital’s current challenge is the 1950’s design of the medical/surgical unit which has semi private rooms with 2 patients per hospital room and 4 patients per bathroom. Of course, we try to minimize the need to share the bathroom when there are fewer patients, but with the consistently increased volume of patients we have been experiencing, that is not always possible. In an engineering assessment of the facility, the report said that if the hospital improves the bathrooms to meet the new building codes the patients’ rooms would then be too small to meet code. Our Emergency Department is a level IV trauma center that is cramped for space, which not only makes administering patient care a challenge, but also presents obstacles regarding patient privacy. The OB department’s location on the lower level of the hospital makes emergent deliveries more challenging by having to travel upstairs to surgery. Also, the layout and locations of all our nursing units hinder our ability to effectively use nursing staff to its fullest potential across multiple departments.
A capital campaign is great for a defined project, such as a new wing or large renovation. However, it does not supply the ongoing access to funds the hospital needs. Sure, we could use a capital campaign to raise $2 million to make a host of equipment repairs and upgrades that are needed, but that equipment will be in need of repair or even obsolete within 5 to 8 years, and we will be right back to where we started.
Vote YES on November 5th to help Hiawatha Community Hospital thrive not just survive by having the tax support funds to help purchase the capital equipment and maintain facilities necessary to provide care for our patients.
300 Utah Street