Hospital System In Cash Crunch

DAYTON - The Columbia County Health System is more than $800,000 behind in its accounts receivable as a result of its recent switch to a voter-approved electronic health records system - a situation that has created a serious cash crunch, hospital directors learned last week.

News of a swamped billing staff and unpaid invoices more than 90 days old has prompted directors to authorize CEO Charlie Button to tap into a reserve fund while the district's billing operation is outsourced in part to a Spokane-based company charged with getting caught up on many of the bills.

Working with the new electronic health records system, installed in September and approved last February with a $790,000 levy by voters in the Columbia County Public Hospital District, billing staff just hasn't been able to keep up with the processing of medical bills, Button told hospital commissioners at their regular board meeting last Wednesday.

Button called the accounts receivable backlog "a pretty significant amount of money for us."

The hospital district decided to switch to an allelectronic health records system ahead of a nationwide requirement for federal medical reimbursements to take advantage of incentive programs under the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services.

These electronic health records incentive programs will provide payments to eligible critical-access hospitals, like Dayton General, to the tune of thousands of dollars. The deadline for switching to the electronic systems under this incentives program is 2011/2012. Columbia County Health System covers patients in Dayton and Waitsburg.

"In other words, if we do it now we're rewarded," Button said.

But although hospital staff was trained months ahead of the change, conversion to the computerized records and billing system put the billing department behind, he said. Within the hospital at large, employees have had to completely relearn their jobs, using computers where they never had before, Button said.

But getting this far behind in being paid for medical services is unacceptable, commissioners said.

"We have to stay open," board member Ted Paterson said. "We have to pay our own people."

With that in mind, the board last Wednesday gave Button "discretion to keep the hospital running and the staff paid, keeping in mind that there is not an endless pot of money to tap into," according to a motion Paterson introduced.

Button proposed, and the board accepted, that the hospital use about $200,000 from a reserve fund to pay staff and current expenses until billing gets caught up.

This reserve fund, Button explained, is made up of tax revenues collected over the years to make payments on a bond. More money has been collected than is required to make those payments. Over time, the reserve has built to its current balance of $474,000, Button told the board. As the board hasn't yet determined what to do with those excess funds, Button proposed the hospital tap into them until money from unpaid medical bills begins to come in. Commissioners agreed. The plan is to replace reserve money with incoming accounts receivable funds, Button said.

"It's hospital money," Button said. "So if we need to, we can tap into it. It's better than borrowing from the bank or any other institution."

But tapping into that reserve cash won't be enough to turn things around. The hospital district's four billing department employees, whose operation covers the hospital, the rest home and clinics in Dayton and Waitsburg, will need help to get caught up, said Button, who plans to outsource all of the district's oldest bills to Spokane-based Health Care Resource Group (HRG) for the next three months.

"This should clean up everything that is 90 days," Button said.

HRG will also take on Medicare billing for the next two months. Medicare has the potential for quickest turnaround, he told the board. Within two weeks, the hospital should start to show income from those accounts.

Paterson, speaking on behalf of the anxious board of commissioners, insisted that Button be able to show evidence that this outsourcing reverses the trend in accounts receivable by the Jan. 27 meeting of the board.

Button is confident this will happen. Typically the hospital runs between 60 to 70 days out in billing, he said. This current trend of 90 or more days is the worst the district has seen, but it's normal following a transition like the one employees are experiencing with the new electronic health records system, he said.

Board members referred to the problem as a "crisis" situation last week, but Paterson was quick to follow up by saying the state of affairs is not all "doom and gloom."

Button plans to return billing operations to normal once HRG has aided staff in "catching up," he told the board.

The Garfield County Hospital District in Pomeroy switched to HRG just over a year ago. The billing company has garnered high reviews from administrators at Garfield County Memorial Hospital.

"We are very happy with HRG," said hospital district CEO Andrew Craigie during a telephone interview Tuesday. "They have done a phenomenal, professional job. I highly recommend them."

Garfield County had been dissatisfied with the company they'd used for outsourcing their billing. Their accounts receivable was backlogged in excess of 120 days, or six months, "an unacceptable situation," Craigie called it.

Under HRG, Pomeroy has their billing situation back under control.