09/14/11 — Hospital to raise rates by 5 percent

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Hospital to raise rates by 5 percent

By Phyllis Moore
Published in News on September 14, 2011 1:46 PM

The board of directors at Wayne Memorial Hospital has approved a 5 percent rate increase as part of the hospital's $191 million budget for fiscal year 2012.

The lingering recession, an increasing number of uninsured patients and continued pressure from Medicaid for payments are just a few of the contributing factors that went into the proposed budget, hospital officials said.

The 5 percent rate increase is necessary to cover higher costs and to position Wayne Memorial as a "quality, locally controlled hospital in the future," said William Paugh, hospital president. Positive margins are required to protect the hospital's ability to finance long-term projects with long-term debt.

Two areas that could see increases in the coming year are admissions and outpatient volumes. At the same time, officials said, the growing numbers reflect more uninsured patients, leading to more charity and bad debt cases.

"We think admissions, after several years of slight declines, are going to rise slightly -- 2.2 percent from 2011," said Rebecca Craig, vice president of finance.

In 2009, admissions were 13,127, but have since dropped -- 12,900 in 2010, with estimated projections for 2011 at 12,499. For fiscal year 2012, that category has been budgeted at 12,778.

Possible reasons cited for the decline, officials say, have been the economy as well as increased pressures on physicians to treat patients as "outpatients."

As the hospital attempts to recruit more physicians to the area, the number of outpatients is expected to go up in the coming year, by 1 percent, as well as in the emergency department, which is currently in the throes of an $18 million expansion project that will double the size of the treatment area.

In addition, several areas have shown pronounced increases, Mrs. Craig said. The number of patients seeking behavioral health treatment is up 20 percent; MRI volumes rose by 19.1 percent; and endoscopy procedures climbed 31 percent.

The largest segment of the hospital budget, salaries, represents 38 percent. For the coming yea,r that is estimated at nearly $80 million, up $3.4 million from the $76.6 million in 2011.

"We talked about how our volumes are going to increase -- it's going to take more people," Paugh said. "The Pay for Performance (evaluation) program will also raise our wages and salaries 2.1 percent."

Of course, the down side will be bad debt and charity cases, which Mrs. Craig indicated remain an issue for hospitals nationwide.

An estimated 11.6 percent, or $51.5 million is anticipated as part of the write-off for charity care, up from 11.3 percent or $45.9 million this past year.

"About one in nine patients pays nothing for care," Mrs. Craig said, adding, "I would say we are very similar to other hospitals in eastern North Carolina. We have done a better job of working with our patients really to have them talk with us and fill out the paperwork to prove to Medicare and others that we do meet their guidelines."

"We're trying to differentiate the difference between those that can and don't pay and those that can't pay," Paugh said, stressing the importance of determining that at the beginning rather than waiting until the collection process.

Across the board, though, the hospital remains competitive in how it charges for services.

"If you look at the 55 hospitals in eastern N.C., look at what our charges are on a case-to-case basis, Wayne Memorial ranks 50th," Paugh said. "WMH would be charging about 65 percent of what the average hospital in N.C. charges."

"If you're a consumer, 50th is a good thing," Mrs. Craig said.

In the other portion of the budget, capital projects recommended for 2012, an estimated $10.2 million is earmarked for "routine" replacements, new technology and upgrades of equipment and information systems.

Typically, the routine capital items represent annual depreciation amounts, $9.2 million, plus leases and rentals, or $3.4 million. Broken down further, that amount equates to $3.2 million for facilities, $2.6 million for medical equipment and $2.2 million each for information systems and infrastructure and other.

Some of the facilities improvements include a multi-year project in labor and delivery -- $900,000 which will be used for carpeting, upgrading nurses station and "freshening up" the area. Other projects include improved infection control in the ICU and upgrades to the laboratory and third floor main tower medical unit.

Infrastructure improvements include re-roofing the second floor overhang to the main tower, library heating, ventilation, air conditioning improvements and upgrades to visitors elevators and surgical services master facility planning

In addition to the emergency department, other long-term projects mentioned are a $3 million medical office building, to be completed by 2012. The office, Paugh said, will be on the hospital campus and house many of the physicians the hospital is working to recruit.