DCHS sees positive month, but Blue Cross woes persist

IRON MOUNTAIN – Although Dickinson County Healthcare System (DCHS) is still showing a bottom line loss for the year, due in part to reimbursement issues with Medicare and Blue Cross, there were some gains in July.

During the hospital board of trustees’ monthly meeting on Thursday, trustees learned that the hospital had $7,511,673 in total operating revenue and $7,455,843 in expenses, which resulted in a total operating gain of $55,830.

July’s performance brought the year-to-date loss in operations to $2,840,176 for the year.

“July’s numbers are very positive, and behind them is a tremendous amount of work expended by an exceptionally dedicated group of employees,” said DCHS Administrator/CEO John Schon. “But one good month does not make a positive year, and we have a lot more work to do. We owe it to our patients and to this community to be successful.”

Schon pointed out that there is a reason that the hospital is losing money.

“There is something wrong, and the problem lies in inadequate reimbursement for the services we provide,” he said.

One concern is Medicare reimbursement. Medicare accounts for 45 percent of DCHS’s business. The Medicare program reimburses DCHS $525 less per Medicare admission compared to the average reimbursement received by other hospitals in the region; this equates to $1 million annually.

The other concern is Blue Cross reimbursement.

Information was shared with the board to show the reimbursement discrepancy between how Blue Cross pays DCHS in comparison to other Upper Peninsula hospitals.

The average overall payment of Upper Peninsula hospitals is 37 percent greater than payments made to DCHS. If Blue Cross were to increase its reimbursement to DCHS by 37 percent to bring it to the average payment rate of Upper Peninsula hospitals, it would equate to a $5,790,555 net patient revenue increase.

By their own admission in a recent letter, while Blue Cross accounts for 25 percent of DCHS’s business, reimbursements total only 17 percent of net revenue.

Both of the hospital’s labor unions, MNA and AFSCME, expressed their concern over the Blue Cross reimbursement experienced by DCHS, and the negative impact the issue is having on their wages, health insurance, and overall employment.

MNA signed a six-year, zero percent wage increase contract with DCHS and stated that RN compensation has been directly and negatively impacted by Blue Cross.

AFSCME signed a contract for a .5 percent wage increase with no guarantee that it will continue next year.

“The cost of gas goes up along with the cost of groceries,” stated Pam Maule, RN and MNA representative. “When wages are frozen, it quickly becomes a quality of life issue. We have a high quality hospital with exceptional staff; we are simply asking to be reimbursed fairly.”

Jen Johnson, AFSCME representative, had similar concerns.

“AFSCME represents a large group of employees who cannot afford to have smaller paychecks as they lose hours and need to pay more for health insurance,” she said. “Many of our members are single moms who are taking additional jobs to make ends meet.”

Dickinson County Commissioner Joe Stevens was also present at the meeting.

“I was going to keep quiet today, but I can’t,” he said. “The county stands behind our hospital and all of its employees; they do a remarkable job caring for the people of this community. I am disgusted with Blue Cross. Shame on them.”

Board of Trustees Chairman Bill Edberg said that DCHS has tried to work with Blue Cross and play by its rules in the past.

“It has become clear to us that Blue Cross is not interested in negotiation,” he added. “This is a long-standing problem that has reached a tipping point. We need Blue Cross to level the playing field so we can continue to provide much needed services to our communities. We intend to leverage support from as many stakeholders as possible. And this is not Blue Cross-bashing. We are trying to educate the community on the challenges that face us.”

Bruce Orttenburger, president and CEO of the Dickinson Area Partnership, offered his support and assistance to the hospital.

“Local business and the Dickinson Area Partnership stand behind DCHS in its quest for fair reimbursement from Blue Cross,” he said. “Their reimbursement shortfalls threaten the viability of Dickinson Memorial Hospital, the economic stability of the region, and ultimately, the availability of locally-accessible, high-quality health care for area citizens. As Dr. Henke stated in his recent Letter to the Editor, this is the ‘most important hospital in the world’ because it is our hospital. We are all in this together.”

Edberg noted that board members have been in contact with State Sen. Tom Casperson, R-Escanaba, and State Rep. Ed McBroom, R-Vulcan, who are both supportive of the hospital.

However, Edberg suggested that sending letters to state representatives and to Blue Cross “couldn’t hurt.”

“We appreciate everyone’s support,” he added.