Harrington:PIMC Financials and the Upcoming Election

This update focuses on Peace Island Medical Center's financial results as reported to the WA Department of Health. I'm providing this as background for the upcoming election, which will include races for new hospital district board members and which may include an updated levy request for PIMC. The filing deadline for hospital board candidates is in May.

Recently PeaceHealth reported through the San Juan Public Hospital District that cash flow for the second half of 2014 exceeded direct expenses by $1,441,332. It also touted a new certification as of April 2014 which "improved its reimbursement rate."

So I decided to dive into the numbers a bit more.

The following information comes from a spreadsheet that PeaceHealth/Peace Island is required to submit to the WA Department of Health on an annual basis. Two year-end documents are now available for review: Fiscal year ending June, 2013 and fiscal year ending June, 2014.

The total gross revenue to Peace Island for the fiscal year ended June 30, 2013 was $6,185,596. PeaceIsland opened in late November 2012, so this figure reflects just over seven months of operations.

For fiscal year ended June 30, 2014, Peace Island reported total gross revenue (from all sources) of $14,480,928. For comparison, the total district budget for both EMS and InterIsland Medical Services in 2012 (as stated by financial auditors for the State) was "approximately $6 million."

Currently EMS gets a $963k subsidy through our property taxes which the hospital district board has said funds roughly a third of the EMS expenses, which suggests the total EMS budget is approximately $3 million.

Which means the combined InterIsland Medical Center/EMS budget of approximately $6 million in 2012 almost tripled to a combined PeaceIsland/EMS budget of approximately $17.5 million for the year ended June, 2014.

It is true that the federal and state government get billed for many of these services - but hopefully we can agree federal money is not FREE money; it's OUR money.

Here are some of the revenue buckets for PIMC as reported to the WA Department of Health: (Note I've rounded the last three digits below)

Lab $1,462,000

Radiology/diagnostic - $3,940,000

Emergency room - $2,950,000

Clinic - $1,844,000

On the expense side, for fiscal year 2014, PeaceIsland expensed $2,213,000 for hospital administration. This bucket includes funding to pay for senior executives, including the PeaceHealth CEO/Chief Mission Officer whose compensation was $1.434 million for year ended June 2013. (The "Chief Mission Officer" part relates to enforcing Catholic doctrine.)

When the clinic was operating, people were unhappy because the clinic was operating at a loss which islanders subsidized.

We now have a situation where IN LESS THAN TWO YEARS, the combined EMS/PIMC budget ballooned from approximately $6 million to $17.5 million. And of course, the "higher reimbursement rate" which kicked in in April 2014 suggests that PeaceHealth will be reporting substantially higher revenues for the year ending in June 2015.

It's easy to understand where some of the revenue is coming from. If you look at the Emergency Services column, you'll see that there were 2708 visits to the Emergency Room for the fiscal year ended June, 2014.

The total gross revenues for Emergency Room visits was $2,950,363, for an average of $1089 per visit BEFORE including any charges for "laboratory billable tests," MRIs, pharmacy, CT, radiology/diagnostic, or other services.

It's been well documented that many of these "emergency" visits are actually urgent care situations, where a patient has a non life-threatening health situation but can't get in to see a primary care physician on a timely basis because of the way Peace Island is staffed. An example might be someone presenting with a cut needing stitches or an ear ache. Many islanders have complained about the unreasonably high bills that accompany urgent care situations which are being routed through an emergency room process.

There were also 92 admissions and 202 patient days for the year, which represents a 5% utilization rate of the in-patient beds. (The hospital has 10 beds, which is the minimum requirement for a Critical Access Hospital.)

One question is whether it's reasonable to build so much overcapacity - with all the increased staffing/overhead that requires - in order to send a much higher bill to federal and state taxpayers.

The other question is whether it's fair or reasonable for islanders to be getting much higher bills for services that were previously available at much lower cost in a less ambitious facility.

I encourage those of you with financial backgrounds (I used to analyze business opportunities in the high tech sector) to dive into the numbers more deeply and to start asking your own questions as we head into the election season for new hospital district board members.

The high level concern is that this community now and for the next 50 years is subsidizing an overbuilt facility with a very high cost structure that is out of balance with the needs of the community.

All of this, of course, is in addition to the issues already raised about services being restricted by religious doctrine and the costly legal battles likely to flow from those issues.

Here is the source document from the Washington State Department of Health.

www.doh.wa.gov/DataandStatisticalReports/HealthcareinWashington/HospitalandPatientData/HospitalFinancialData/YearEndReports/2014HospitalYearEndReports As always, let me know if you have any questions,

Written by Monica Harrington

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