Territorial Hospital Board Hears Mixed Vendor Reviews, ‘Bad Months’

The Territorial Hospital Board received a mixture of good and bad news Wednesday on St. Thomas as the chief financial officers of Schneider Regional Medical Center and Gov. Juan Luis Memorial Hospital gave reports on the hospitals’ financial status.

Schneider’s ‘Bad Months’

Schneider Chief Financial Officer Fred Vitello reported that the hospital experienced a spike in collections – a 25 percent increase in April – partly due to settlements with Medicare and CIGNA. The following months, however, appeared to have dropped sharply, and not only in comparison with April.

May and June – especially June – were “bad months” for Schneider, Vitello said. In May, the net assets decreased by $1.55 million and the hospital only budgeted for $1.09 million in losses. Schneider Medical Center’s decrease in net assets for the fiscal year so far is valued at $10.9 million, starkly higher than the budgeted losses of $3.89 million, he said.

Both net and gross patient revenues dropped about 10 percent from April.

Vitello cited as part of the problem the hospital’s debt to the Internal Revenue Bureau: more than $700,000 in fees incurred from inappropriately filed taxes from 2004 to 2012. The amount owed was discovered when time came for Schneider to renew its pharmacy license, according to Vitello, which would not have been obtained without clearance from the IRB.

Schneider has renewed the license, Vitello said, and established a payment plan that put them “on track with the IRB.”

Luis Hospital also reported a decline of revenues, looking at trends on the longer term. The hospital highlighted a 16 percent decrease in inpatient revenue between May 2013 and May 2014, a sum that was offset, however, by an increase of 10 percent in outpatient revenues over the same period.

“We’re still in the mode of, ‘Money comes in and money goes right back out,’” said Michael Younger, JFL interim chief financial officer.

He added, “The expenses have decreased; however, if you don’t have money to buy anything, you don’t buy anything,” referring to a 15 percent decrease in total expenses in the current fiscal year to date, compared with the 2013 fiscal year.

Mixed Reviews

Both hospitals have pushed contracts with financial management firm Advisory Board as a means of streamlining their ailing revenue cycles. Schneider’s contract with Advisory Board was already in the works in the later part of 2013. JFL followed suit, but the territorial board took more time approving its contract with the firm because of the steep initial contract amount – $1.2 million over 12 months.

The board finally gave it the green light in June with a modified contract amount of $560,000. Two months later, the CFOs of both hospitals have varying opinions on the effectiveness of the firm in improving revenue cycle practices.

Vitello indicated in his report that, during the span of Schneider’s contract with Advisory Board, the hospital showed “poor collection performance in May and June,” but improved collections in July. The hospital also showed “modest increase in point-of-service collections,” Vitello said.

The silver lining is the fact that part of Schneider’s payment to Advisory Board is “at risk” and would only be paid if certain standards are met.

“I have no reason to change gears, but we really need to go,” said Bernard Wheatley, Schneider’s chief executive officer. “If you don’t deliver, you don’t get paid.”

In comparison, Younger gave glowing reviews of Advisory Board’s performance. The program started kicking in on the second week of July, said Younger, who expects to see insurance denial rates go down and more cash coming in in August.

“I already know for a fact there were some big bills we were contesting with Medicare that are going to get paid because of the work that Advisory Board has done,” said Younger.

St. Croix District Board Chair Anthony Ricketts was more cautious with his assessment.

“I’d rather see increased collections,” he said, adding, “but I do feel positive about it.” He said, “It will take a little while to see these changes, but I think we’re starting to see something.”

Board members noted that it is important for JFL to mark the progress Schneider is making and to realize that “it’s not going to happen overnight, according to Territorial Board Chairwoman Lynn Millin-Maduro.

Both CFOs emphasized that the hospitals also have to pull their weight in revenue cycle improvement.

“This is a partnership, not a thing we’re throwing at a vendor, and they have to manage the whole thing,” said Younger.

In other action, the board approved some 16 policies for Luis Hospital. The board also unanimously approved all initial appointments and reappointments for medical staff brought before the body.

Present in the St. Thomas boardroom were Millin-Maduro, Ricketts, board members Maria Tankenson-Hodge, Cornel Williams, Debra Gottlieb, Miles Stair, Aldria Harley-Wade and Philip Arcidi. Board members Angel Dawson and Joyce Heyliger attended via telephone. Wilbur Callender was excused and Greta Hart-Hyndman was absent.

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