BURLINGTON — On Oct. 8, Burlington’s newspaper reported Coffey Health Systems, which includes the county’s hospital, had a net year-to-day loss through August of $509,914.
A good portion of the loss occurred during August — “a traditionally slow month” — at $81,536, Chief Financial Officer Karen Smith told trustees.
Outpatient services were a bright spot, she said. Pain management had 39 procedures, up 68 percent from July, and surgery had a record month with 156 procedures.
For the year, the hospital is down 130 admissions compared to last year, the Coffey County Republican reported.
THE STORY of CHS’s financial health has been circulated in Allen County. A referendum Tuesday will decide a countywide quarter-cent sales tax, which will determine whether construction of a new Allen County Hospital will start in 2011.
If it passes, construction of a new Allen County Hospital will rely on three sources of funding.
The county sales tax coupled with what the City of Iola has offered will net $750,000 a year for 10 years. Medicare reimbursements will come in at about $765,000 a year. And hospital profits are predicted at $1.5 million a year.
The difference between finances at Allen County Hospital and CHS, and why net income at ACH is on the positive side, has several explanations.
The biggest is Allen County Hospital’s designation as a critical access hospital which allows for reimbursements of 101 percent from those patients who receive Medicare. The designation is for hospitals with 25 or fewer beds. Burlington’s hospital is licensed for 36 inpatient beds and is not critical access.
Coffey Health Systems has 330 employees who operate not only the hospital but also assisted living and long-term care homes and the county ambulance service. About 170 of those employees are in the hospital, including eight doctors and four mid-level medical practitioners.
ACH has 160 employees. None of Iola’s physicians are employees of the hospital, which is managed by Hospital Corporation of America.
Coffey Health Systems also relies on property taxes for its financing. Wolf Creek Nuclear Operating Corporation makes that financing attractive. A 2 mill levy in Coffey County draws about $750,000 a year from the county’s valuation of $370 million. Two mills in Allen County brings in about $185,000, or about one-fourth as much.
Allen County commissioners have said all along that the hospital will not be funded by property taxes.
Daily admissions at the Burlington hospital vary greatly, making it difficult to budget too far in advance, said its Chief Executive Officer Dennis George.
“We may have 26 inpatients one day, two the next,” George said. Even so, CHS hasn’t had to furlough anyone.
He thinks a major reason for the decline of inpatient numbers is the economy.
“People aren’t having elective procedures,” he said. “They’re just toughing it out another year,” while waiting for the economy to recover. “We’ve lost a lot of that business.”
ANOTHER BIG advantage of ACH being critical access is that Medicare will reimburse the county for the construction of a new hospital on a pro rata basis. That is, the amount of the subsidy is proportional to the percentage of the patient load that comes from Medicare patients. A conservative estimate is that 50 percent of patients at ACH receive Medicare benefits.
The Burlington hospital serves an in-county population of nearly 10,000; Allen County’s population is about 13,000.
An aside George mentioned was that when CHS took over a 42-bed nursing home in 1997, when it was on the verge of bankruptcy, trustees elected to keep it for-profit, which means it pays property taxes to support schools and other community governmental functions.
