Howard Regional Hospital has a down year

scott.smith@kokomotribune.com

The national economy is literally hurting people in Howard County, with more people putting off needed medical help until the problems become acute.

Howard Regional Health System CEO Jim Alender said the county-owned hospital is expected to show a net operating loss for the first time in 12 years, due mainly to the impact of charity care.

"Unfortunately, what drives this is the fact that when someone gets to our emergency room, they're very, very sick," Alender said Wednesday.

In a presentation to Howard County elected officials Tuesday, Alender said the hospital provided more than $45 million in charitable medical care last year.

That represented a 40 percent jump over 2007 and forced a round of staff and operating budget cuts at the non-profit hospital.

Alender said he's confident the hospital is in good shape to weather the storm, given it has cash and investments worth more than $30 million.

But the direction the hospital will take in the future will be linked to federal health-care policy, due to the hospital's position as a regional Medicare and Medicaid provider.

Much of the discussion Tuesday centered around what will happen to the hospital if Kokomo's employment base continues to decline.

Last year, Medicare and Medicaid provided most of the hospital's income, and with the aging of the baby boomer generation, that is expected to continue.

Alender said one of the main concerns among health-care administrators today is what he terms "cost shifting."

Alender sees it as basically a hidden tax placed on businesses and working individuals.

The federal government only reimburses health-care providers for about 70 percent of the cost of services, he said.

That remaining 30 percent is distributed among the businesses and workers carrying private health insurance, he said.

"There needs to be more parity, so there's not so much pressure on the commercial side," Alender said.

An eventual move to a nationalized health-care system "is a possibility," Alender said.

"The federal government is already funding 60 percent or 70 percent of the business anyway."

He said the hospital saw a massive drop in elective procedures in the third and fourth fiscal quarters of the year, along with an increase in the number of patients coming in with acute symptoms.

Because the acute-care patients are staying longer, and many are either Medicare/Medicaid or charity patients, the hospital had massive write-offs.

Alender said the hospital is expected to show a 2008 net operating loss of about $2 million to $3 million, after posting more than $22.5 million in net income over the previous four years.

The reason Alender is optimistic about the future at Howard Regional is twofold.

First, the federal stimulus package contains money to help establish Electronic Health Records nationwide.

Advocates for the system, like Alender, expect the online records will reduce unnecessary medical expenses by giving medical providers access to recent medical tests and medical histories.

"It means if someone just had a CT scan in Kokomo, and they go to Fort Lauderdale and get injured, they might not have to get another one," Alender said. "[Electronic records] really do reduce the number of unnecessary ancillary tests given."

Alender said Howard Regional is already preparing for the coming electronic records revolution with its nearly complete information technology center. The $4 million building will be strong enough to withstand a tornado, and sits at the highest point of the hospital's property. That means the hospital's patient information will be more secure than at the IT department's former location, in the hospital's basement.

Second, Howard Regional doubled the size of its emergency room, increasing the hospital's visits per month, and bringing in additional revenue.

The size of the hospital staff dropped by the equivalent of 69 full-time employees over the past year, and hospital officials have also decided to hold off on a planned, $12.5 million expansion of the hospital's intensive care unit.

Alender said the hospital also has had a very good first quarter, based on January and February.

"We're concerned, but the structure and improvements we've put in place over the last five years have allowed us to provide the services the community needs," he said.