The graphic above, with data from the American Hospital Association, shows the shortfall in payments hospitals receive from Medicare, Medicaid and other government programs relative to the cost of care. (Graphic provided)
The process of charting a course to a sound financial future for Jay County Hospital is on track, but it’s going to take time, hospital CEO Dave Hyatt told Jay County Commissioners on Monday.
“This is a decision that can have a generational impact,” Hyatt said.
The hospital has been dealing with red ink for the past several months as the “payer mix” has shifted toward Medicaid and Medicare and away from commercial insurance.
“Medicare and Medicaid just do not cover the cost of care,” said Hyatt, noting that the problem is not unique to JCH. “Almost 30 percent of hospitals across the country have negative operating margins.”
A steering committee involving the medical staff, hospital trustees, county commissioner Doug Inman and county council president Jeannie Houchins has been at work for several weeks, sorting out the options.
“Local control is important,” said Hyatt, “but we also know we need help financially.”
Possible courses of action include affiliation with a hospital alliance, a joint venture, a merger or the sale of the hospital. Closing the hospital is not an option, Hyatt stressed.
Cost-cutting efforts have already reduced expenses by about $1.5 million, but that’s not enough to cover the loss in revenues.
Hyatt, who will make a presentation to county council Wednesday, declined to set a timetable for when a decision might be made.
“I don’t want to be boxed in,” he said.
Inman praised the hospital’s approach to the problem.
“It’s been very thorough,” he said. “There have been a lot of meetings.”
“It needs to be a group decision because health care’s so important for our community,” responded Hyatt.
Commissioners moved forward Monday with refinancing jail construction bonds to take advantage of lower interest rates. That step came on a 2-0 vote with commissioner Chuck Huffman abstaining.
It was Huffman who first pursued the idea with the accounting firm of Umbaugh and Associates, but when the refinancing is complete the bonds will be placed with First Merchants Corporation, his employer.
“I had no idea that First Merchants was the high bidder,” said Huffman. “I will have to abstain.”
The bonds will be refinanced through Hilliard Lyons at an interest rate of 2.35 percent.
“You’re saving about $60,000 to $70,000 per year,” said Jason Semler of Umbaugh. Over the life of the bond issue, the refinancing will save the county $799,896.18.
Semler also proposed putting together a study for the county that would weigh the coming impact of changes in the assessment of farmland. Those changes, coupled with the “circuit breaker” on residential property taxes, will pose serious challenges for local government finance in the not too distant future.
He estimated the cost of such a study at about $10,000, based on a similar one just finished for Vermillion County.
“This affects more than just the county,” said Inman. “It affects cities, towns and schools. … It makes sense to reach out to see if we can share the cost on this.”
Huffman agreed, saying he would contact Jay Schools and local government in Portland and Dunkirk.
In a similar vein, commissioners agreed to spend $10,000 from county economic development income tax revenues to help cover the cost of a countywide trails plan being developed by the City of Portland.
A state grant will cover part of the cost of developing the plan, but the local match is $32,000. With the $10,000 from the county, the city’s cost now drops to $22,000.