Taking a closer look at health care

Knoxville Hospital and Clinics' perspective

Steve Woodhouse

Knoxville — There has been a lot of discussion about health care reform lately and regardless of the outcome, Marion County will be affected by it.

Amy Campos, an aide for Sen. Tom Harkin, held a forum at the Knoxville Hospital and Clinics (KHC) last Friday. When Campos was asked if private insurance companies would be able to compete with a government option, she did not have an answer. A follow-up message was e-mailed to Campos, who forwarded the message on to Harkin’s Communications Director Kate Cyrul. Cyrul says the government plan would be one option. If a person is happy with his or her insurance and wishes to keep it, that would be another. John Domansky, KHC Chief Financial Officer, believes providing competitive health insurance should not be the government’s role.

“The government has no business competing with private insurance,” Domansky said. “You can’t be a regulator and a competitor.” Ann Helwig, Chief Executive Officer at KHC, has different concerns.

“I look at health care as more of a right, not a commodity,” Helwig said. “I think we can do better for our citizens. Adding additional complexity is not the answer.”

Cyrul believes the public option could be cheaper, because the government would not pay CEOs and executives multi-million dollar salaries. Figures for current heads of Medicare, Medicaid and Veterans Affairs are unavailable, as that information is usually released in the second or third year of a presidency. According to the Office of Management and Budget, the top pay a senior executive within the government can receive is $177,000. A representative with Sen. Chuck Grassley’s office says he does not believe bonuses are given to people at this level to make this figure any higher.

For fiscal year 2007, latest figures available through the Iowa Hospital Association (IHA), KHC had charged approximately $13 million to public programs Medicare and Medicaid and approximately $10 million to private insurance companies. Medicare has different mechanisms for paying hospitals. KHC is designated as a “Critical Access Hospital,” which puts it in the same category for payment as Monroe County Hospital in Albia and Pella Regional Health Center. KHC is in a different category than Skiff Medical Center in Newton and Ottumwa Regional Health Center. The formula for paying these hospitals is different.

KHC is paid 101 percent of allowable cost. Allowable cost applies to actual care of a patient and excludes marketing and other expenses. Domansky says this is Medicare’s way of ensuring that rural hospitals are operational and viable. Medicaid is paid on the same methodology.

However, the amount Medicare pays to rural hospitals is only a small percentage of what is paid across the country. Medicare’s system is designed to allow hospitals to make up the cost of uncompensated care through more volume. Rural hospitals like KHC don’t have the volume to make that happen.

“We were losing dollars because of the economies of scale,” Domansky said.

In FY 2007, KHC’s uncompensated care totaled $1,140,238, or 4.8 percent of its total charges. Every patient, regardless of his or her insurance status, is charged the same for a particular procedure. The hospital was able to collect 83 percent of its charges from private insurance. The total was 67 percent for Medicare and 62 percent for Medicaid.

Uncompensated care includes people who seek treatment without a payer or still owe a portion of their charges. A non-payer has to declare Charity Care, a government term, and give income information and supporting documents to the government. Charity Care also includes those who seek a discount or financial assistance. At KHC, people who earn up to 300 percent of the federal poverty level are eligible.

“As for people who want to help themselves, we’ll help them,” Helwig said. “It’s really our way of reaching out to the community.”

The reduced program, known as STEP, is intended to encourage people to see their doctor on a more regular basis. Helwig and Domansky say the poor usually wait to see their doctor, which can make one’s condition worse. Worse conditions lead to higher costs for the patient.

The VA

One area of uncompensated care that hits KHC is caring for VA patients. The hospital treats the patients in the emergency room, though they cannot be paid for it. One Iowa Congressman is looking to find a way to alleviate the situation.

Congressman Tom Latham has introduced the Valor Act for the second time. The act would allow patients under VA care to receive treatment at their local hospital as well as VA facilities.

Latham says he was inspired to draft the legislation because there are veterans of the Korean War and World War II who have to spend hours on a bus, traveling from their homes to Iowa City for treatment. He would like them to have the ability to be treated at their local hospitals.

“These can be 13, 14-hour days for them,” Latham said. There are currently pilot programs in place to test this and Latham is awaiting the results. This is the second Congress he has introduced it to, as it is awaiting hearing before the Veterans Affairs committee.

According to Latham, the VA was founded based on the notion that veterans suffer from unique ailments such as gunshot wounds and Post Traumatic Stress Disorder.

“A lot of people felt at that time they should have their own health care system,” Latham said. He does not think changes to the VA have come up during discussions on nationwide health care reform.

In Knoxville, Domansky says an ambulance has to be provided approximately nine times a month to transport patients to the Des Moines facility. This means the ambulance is unavailable to Knoxville for approximately three hours.

VA Spokesman Barney Devine says the VA contracts with various health care providers in the community. The VA does not provide ambulance services. Different patients are eligible for different levels of care. If the VA needs to move an inpatient, they take care of it, but that is not the case with outpatients.

Government programs have a lot of regulations

Helwig’s biggest concern is that a new, government-sponsored program will include a lot more paperwork and red tape. She says there are 20 people employed at the hospital whose primary duties are to ensure that the hospital is complying with the regulations of Medicare and Medicaid.

“My fear is that it will be a whole new set of rules,” Helwig said. It can add another layer of bureaucracy and create more opportunities to make costly mistakes. Medicare has the power to punish health care providers who miss compliance.

“They have a bigger club to come after you,” Helwig said.

“We need less government in health care, not more,” Domansky said. “We need to take advantage of existing infrastructure.” By existing infrastructure, he means the processes used by private insurance companies. Currently, Medicare has private insurance companies process its claims. Domasnky says Medicare is actually rewarding hospitals on quantity, not quality. He believs it should be the opposite.

“Nobody from the federal government is coming to see how you’re doing it,” Domansky said.

Profits in America, not Iowa

Part of the problem Domansky and Helwig see with health care is that there are so many industries seeking a part of every dollar. There are the insurance companies, the doctors, the hospitals, the pharmaceutical and medical supplies, to name a few.

“Everybody at the table needs to be aligned, not playing tug of war for dollars,” Domansky said.

In some states, there are conflicts between doctors and hospitals, both seeking a profit. Hospitals also compete with each other by purchasing equipment, just to have an advantage over another.

“When you do buy new equipment, it’s because it’s better for the patients,” Helwig said. Every hospital in Iowa is a not-for-profit effort. Helwig thinks this has given the state an advantage in health care.

“I think that we are so fortunate to have not-for-profit here in Iowa,” she said. “Fundamentally, we’re here for the patients.”

KHC is one of the top hospitals in the state, according to the IHA. The IHA’s Web site, www.iapricepoint.org, has comparisons for every hospital in Iowa and a lot of information. It compares facilities on a number of factors with those of similar size and a state average. For several ailments, KHC is better than others.

You do pay for the uninsured

Patients who have insurance do pay to cover the costs of the uninsured. According to Reuters, that figure is $1,017 a year for a family policy and $368 for an individual. Uncompensated care costs are figured into charges for everyone.

KHC is able to negotiate with most private insurance companies what will be paid by the company. In Iowa, Wellmark serves 71 percent of the privately insured. Helwig says the company also tells KHC what it will pay, without negotiation. Regulation in the health care industry needs to be restored, she believes.

Iowa Cares

The Iowa Cares System has been in place since 2005. It is intended to cover health care costs for the uninsured with federal money.

However, patients can only receive treatment at the University of Iowa Hospitals, unless they live in Polk County, in which case they can be treated at Broadlawns Medical Center.

Transportation can be provided, but not on the patient’s schedule. Patients come into KHC seeking treatment and believe that Iowa Cares can pay for their treatment, only to find out otherwise.

Helwig and Domansky are trying provide more education to the public about this.

Covering the costs of federal program

When asked how a government-sponsored program would be paid for, Cyrul offered no specifics. Her response was, “There are various options for paying for health reform, all of which are still considered on the table. The bill will be paid for.” She also says rationed care is not a possibility.

Various news outlets have said that starting the program could cost $1 trillion. Cyrul is unfamiliar with this figure, and she did not answer when asked what Senate Democrats believe the program will cost to get off the ground.

Preparing for the future

Regardless of whatever changes are made to the health care industry, KHC is preparing for it.

“I hope everybody’s preparing for it in some way,” Helwig said. KHC is adding physicians, educating themselves and staying in touch with politicians. The hospital stands on the strengths of its five pillars of quality, service, people, growth and finance.

“No one of these five pillars is more important than another,” Helwig said. “We’re very excited about the future of KHC.”

In the end, Helwig hopes that the health care industry will get on the same page and focus on what is most important - the patients.

“That’s health care reform,” she said.

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