DCHS sees financial challenges in 2013


News Editor

IRON MOUNTAIN – After improving its financial situation in 2012, Dickinson County Healthcare System is facing new concerns in early 2013.

Through February of this year, DCHS is showing a loss in operating income of $727,129, hospital officials reported Wednesday.

John Schon, DCHS administrator-chief executive, said local support for the hospital remains a key in keeping it viable.

“It’s really critical that we partner with the community and that the community supports our health care system,” Schon said at a meeting of the DCHS Board of Trustees. “That can’t be more important than it is right now.”

In 2012, DCHS showed operating income for the year of $857,594. With the addition of interest expenses and other non-operating adjustments, last year’s bottom-line profit was $21,700, which compared to a net loss of more than $1.6 million in 2011.

In early 2013, revenues are lagging, with officials reporting an operating loss of $422,188 for February. Despite the losses sustained in the first two months of the year, DCHS has provided $517,245 in charity and other free care and has incurred $946,445 in bad debt expenses, officials said.

In a news release, Schon said “multiple, complex factors” contribute to the achievement of a healthy bottom line for hospitals and health care systems.

“Different combinations of payers, severity and length of the inpatient stays, staff levels needed to care for patients, and the increasing costs of pharmaceutical and medical supplies fluctuate from month to month and combine in a variety of ways to create a loss or gain for the month,” Schon said.

Initiatives that are under way to improve the hospital’s finances were outlined as follows:

– The reimbursement received by DCHS from commercial insurance companies currently averages $3.1 million less per year than realized by other hospitals across the Upper Peninsula. Requests to change payment methodology have been made and are continuing.

– DCHS is working with the office of U.S. Rep. Dan Benishek, R-Crystal Falls, to become part of the rural Community Hospital Demonstration Program. Inclusion in this federal program would increase Medicare reimbursement to DCHS by approximately $1 million per year.

– Exploration of membership in a larger group purchasing consortium has begun. Successful inclusion would save DCHS about $500,000 per year on the cost of medical supplies.

– Additional local pharmacies have been included in the 340B Program, which is a program that allows DCHS to purchase drugs at the same prices charged the federal government. This will translate into greater savings on pharmaceutical costs.

Trustee Susan Tracy, who chairs the hospital board’s finance committee, said February was a month in which reimbursement shortfalls were largely evident.

“If we can overcome our reimbursement challenge, our financial challenge goes away,” added Schon.

In the meantime, he stressed, DCHS depends on patients selecting local care.

“As we continue to navigate our way through what has started out to be a very challenging year, it is more important than ever for our patients to utilize their local, community hospital and physicians for their health care and check to see if health care services are provided locally before leaving the area for them,” he said. “The utilization of our local services and programs by our local friends and neighbors is the best initiative to maintain our financial viability into the future.”

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