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Hospital seeks input on numbers change

Tuesday, April 13, 2004

Information related to a program that could save millions of dollars for operation of Floyd Valley Hospital was presented to members of the Le Mars city council this week by Mike Donlin, hospital administrator.

The presentation was part of hospital efforts to familiarize the public with the critical access hospital program which is related to Medicare reimbursement, or the amount hospitals and other health-care providers receive from Medicare for services provided. The amount received is often less than the actual cost and the amount billed.

Donlin said 56 Iowa hospitals are now part of the critical access hospital program, including those at Hawarden, Rock Valley and Sioux Center. The program is intended to help small rural hospitals in areas where having a hospital is critical to the community.

Donlin said Floyd Valley has looked at the program before, but has "always struggled" with the number of beds required. The program allowed a maximum of 15 beds designated for critical care, a number always exceeded at Floyd Valley. He said recent changes to the Medicare drug bill eliminated the 15-bed limit and made the program a better fit for the Le Mars hospital.

A recent Floyd Valley Hospital analysis shows that 46 percent of the hospital's annual revenue is from Medicare, one of several sources of payment by fee schedules rather than actual billed costs. He said fee schedule payments overall are 69 percent of the hospital's total annual revenue, a figure that includes Medicare and Medicaid.

The difference between the actual cost of services and the amount paid by Medicare and other fee schedule sources is an expense to the hospital. Donlin said the amount absorbed as a cost to the hospital was about $1.9 million in 1999 and grew to about $3.2 million in 2003. He said if Floyd Valley had been designated as a critical access hospital in 2003 the amount would have dropped from $3.2 million to $1.3 million.

Donlin said the hospital was licensed for 44 beds in the 1960s. Now outpatient care is 57 percent of the hospital's revenue and acute (in-patient) care is 34 percent. He said the hospital could reduce its total number of beds to 25. "The way medicine is practiced now the extra 19 beds are not needed."

Average census (number of hospital patients) in 2003 was a total of 14.4 per day with 9.6 of those acute care patients.

Donlin said the change to 25 beds is sufficient even if hospital use grows. "Growth of 10 percent to the (Le Mars hospital's current) market share would add only 2.3 patient days to the average daily census."

Under the critical care access program, most patient rooms would be made private rooms, with six semi-private rooms and six rooms for same day surgery patients.

He said the hospital would be "giving up 19 beds that are not being used to get significantly better Medicare reimbursement."

Donlin said he is talking to community members to get their input prior to further discussion by the hospital board next week.

Le Mars city council members took no action on the presentation. Floyd Valley is a municipal hospital.



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