El Centro, hospital explore optionsOctober 06, 2013
The case for finding an experienced medical partner to help carry the burden of managing El Centro Regional Medical Center doesn’t really need to be made by local officials. The modern health-care system has already done that.
City and hospital officials stress that El Centro Regional Medical Center is in good financial shape, but additional regulatory and financial uncertainties with the Affordable Care Act are just a few of the many reasons to strike up a partnership or sell the hospital outright.
“I think that the Affordable Care Act created another reason why we should move forward with affiliation, but it is not the driver. It’s a multitude of drivers,” El Centro City Councilwoman Cheryl Viegas-Walker said.
Viegas-Walker chaired a task force of two City Council members and three trustees to explore affiliation, the term hospital officials are using to basically describe partnering with a larger health care provider like a Mercy, a Scripps or a Sharp, for instance.
The hospital is in negotiations with one or more unnamed potential partners, although ECRMC officials would say no more. Viegas-Walker did say site visits to the hospital are underway by those potential partners, with an announcement expected by the end of the year.
ECRMC is the last city-owned hospital in California, a business model that has fallen out of favor over the last few decades as publicly owned hospitals pooled their resources or partnered with larger companies.
Although ECRMC officials say they have explored the option of an affiliation over the past 20 years, those discussions have been limited to forming a partnership with Pioneers Memorial Hospital in Brawley, a relationship that has never panned out as envisioned.
El Centro city officials announced in May they were considering forming an affiliation once again, and engaged the services of Hammond Hanlon Camp, a consulting firm to assess whether the city should sell, lease or partner in the hospital with another entity.
“Sure, it (ECRMC) is profitable and in excellent financial shape. But if it isn’t (profitable) two years or five years from now, the city is liable,” Viegas-Walker said. “We want to mitigate the risk to the city and to our residents by selling the hospital at a point in time when it is advantageous to do so.”
The Affordable Care Act, commonly known as Obamacare, brings with it many more changes to an industry already fraught with uncertainty, one that ECRMC Chief Executive Officer David Green likens to a game of baseball where the rules change in every inning.
If there is just one thing Green is sure of, it is this: “Obamacare is continuing to reduce reimbursements and asks for more,” he said.
Medicare and Medi-Cal reimbursements are already slim. Nearly three-quarters of ECRMC’s patients are on a health-care assistance program, with 44 percent on Medicare and 28 percent on Medi-Cal, according to the hospital’s annual report for fiscal 2011-2012.
The hospital collects 20 to 22 percent on its Medicare bills to the federal government and 12 to 15 percent on its Medi-Cal bills to the state, Green said.
The contractual allowance — the difference between what a hospital bills and what it collects — was 30 to 40 percent in the 1980s, he said, which meant a 60 to 70 percent collection rate.
“If you collect 50 percent, you’re doing well,” he said.
Also, the ACA changes the definition of an inpatient visit, Green said, which brings its own set of challenges.
Before the ACA, one overnight stay at the hospital qualified for an inpatient admission. Under the ACA, a patient must stay at a hospital for two midnights to gain inpatient status, and doctors must justify their reasons why. Those who don’t qualify for inpatient status will be admitted as “observation patients” and billed as if they’re outpatients, Green said.
He could not say what kind of impact this new definition would have on the hospital’s bottom line, but the implication from city and hospital officials is that a corporate partner would be better suited to deal with these challenges than an independent hospital.
Many of the new regulations have complicated the administrative side of the business, Green contends.
“It takes so many resources to do what we need to do,” Green said.
Case management is a prime example. In days past, it took just two people to coordinate a patient’s hospital discharge planning. Nowadays it takes “over a dozen” to make sure the medical coding and documentation is correct, he said.
“From the minute the person is admitted, they start the discharge process,” said Kathleen Pipkin, ECRMC spokeswoman. Some get discharged to their homes, while others have to go to secondary facilities.
Commonly, in a modern health-care environment, larger hospitals with multiple campuses would have centralized such functions, an impossibility for El Centro. The result has been the need to hire more and more staff to do the same function.
The phase-in of the ACA exacerbates other long-standing issues like recruitment. Seven of the around 75 doctors who work at the hospital are over 65 years of age, Pipkin said. One neurosurgeon is in his 80s.
An independent consultant’s report found that the area is short by about 30 primary care physicians, Green said.
Valley residents who can afford to do so seek specialists in San Diego.
“We need additional access to doctors and specialists,” Green said.
Unfortunately, convincing doctors to work in the Imperial Valley is difficult and expensive, he said. Oftentimes, one has to sell the area in addition to the perks of practicing medicine here. Recruiters charge a $30,000 to $40,000 finder’s fee, he said. The hospital also helps doctors set up a private practice in the Valley. Many want an income guarantee in their contracts.
Being part of a larger health-care system would relieve ECRMC of this burden, Green said.
“Most have a foundation or health system that recruits physicians,” he said.
Sometimes, having a specialist is not enough.
“If you have a heart attack, you have to go to San Diego,” Pipkin said.
“There is a cardiologist here but the hospital doesn’t have the facility to help people if they’re having an episode,” Pipkin said.
While El Centro officials say they are in the process of setting up a catheterization lab, patients currently having a heart attack need to be transported to San Diego. A cath lab allows doctors to view the interior of blood vessels and the heart.
In spite of the medical advances at ECRMC, in spite of the solid financial footing, officials say affiliation really is in the best interest of the community at large.
Although Viegas-Walker said she expects to have a potential partner identified by the end of the year, “There is a lot of regulatory approval and licensing issues we have to go through,” she said.
It’s too early to say what the terms of the agreement might be.
“There is a potential for some kind of cash structure or cash payment (to the city), but we’ve not had that discussion of what that might look like or what would be the appropriate course,” Viegas-Walker said.Contact:Antoine Abou-Diwan , Staff Writer760-337-3454