Bad debt threatening hospital budget

Hardin Memorial Hospital’s problems with bad debt continue and could derail its budget by fiscal year’s end.

Officials revealed Tuesday the hospital is running a roughly $2.2 million budget deficit, which falls well below expectations and predictions it would be running a $713,000 surplus by the end of February. The hospital racked up around $162 million in costs during the first eight months of the fiscal year and less than $160 million in revenue.

Personnel and supply expenses are below budget, but bad debt has surpassed projections by roughly $2.6 million at $13.8 million. Bad debt accrues when patients do not pay their bills.

Vice President and Chief Financial Officer Elmer Cummings presented a chart showing the hospital’s bad debt and charity care expenses and write offs have crept upward during the past three fiscal years.

To combat the rise of bad debt, the hospital has created new finance and billing positions to catch up on and manage claims, ordered audits and recruited consultants to analyze its billing processes and charge master to ensure both are managed properly, according to Cummings.

The hospital also is tracking and weeding out bad addresses and improper employer information submitted by some patients, he said.

At the same time, Cummings said the hospital has relaxed its self-pay schedule from 12 months to 24 months to give patients more flexibility in making payments on larger bills and has offered a bad debt amnesty program for those who have not paid over the last two years. Those who take advantage of the amnesty program can receive a 30 percent discount and a paid status on their credit rating through the end of April, he said. To date, the program has reaped around $51,000 with March estimated as the best month for the program, according to officials.

Trustee Dwight Morgan said he had some reservations with the program because it sends a poor message to loyal patients who pay promptly and on time yet receive no such discounts.

“It doesn’t go over well for me,” Morgan said.

Officials said the program was created to stem the tide of bad debt. President and CEO Dennis Johnson said the hospital offers other discounts for self-pay patients without insurance who pay promptly.

According to officials, patients who do not comply with the hospital within 76 days of a bill’s issuance will have those bills turned over as bad debt on day 77.

Cummings said the hospital tries to register as many patients as possible for charity care if they work with the hospital, but many of them are not willing to submit the needed information to do so.

Asked by Trustee Doug Goodman if the hospital can make budget with only a few months left to recoup the losses, Johnson did not mince words.

“It’s going to be a challenge,” he said.

After the meeting, Goodman said he voted against the current budget because he feared the hospital’s revenues would be unable to match expenses.

“We’re not coming close to making any money this year,” he said.

Marty Finley can be reached at (270) 505-1762 or mfinley@thenewsenterprise.com.

In other business

• The HMH Board of Trustees approved a business plan for a new public address system, which will be used to communicate emergency codes, communicate during emergencies and backup pagers and phones when needed. The Bogen Communications system will be purchased from Advanced Global Communications at $179,687, paid for out of money substituted from the capital budget after work on a cardiac catheterization lab came in under budget, according to Assistant Vice President and Compliance Officer Steve White. The acquisition includes equipment, interfaces, installation and training. The current system was installed in 1992 and has malfunctioned several times in recent years, which was the impetus for the upgrade.