Affordable Care Act has high cost for local hospital

RANGELY | Since the passage of the Affordable Care Act in 2010 budget struggles have been nothing new for Rangely District Hospital. Dwindling Medicaid payments coupled with booming Medicaid participants exacerbated those financial challenges.
The hospital budget operates under a variety of revenues. There are two mill levies associated with the hospital. The operating mill levy, which is decades old, helps fund the annual operations and can be used to pay any valid expenses. The amount raised through the operating levy has seen a regular and significant downward trend in the last four years. In 2013 the total operating levy was $2.4 million. By 2017 it had dropped to $1.3 million and currently covers just 8 percent of expenses.
The bond mill levy, which was voter approved in 2010, was used to help build the new hospital and will sunset in 2026. The cost of this levy to taxpayers fluctuates each year as the annual property appraisals are adjusted. When property values go down the percentage of the levy must go up in order to receive the same amount of funding to make the bond payment. Thus the amount gathered through the bond levy has stayed relatively steady with $3.8 million gathered in 2013 and $3.79 million in 2017.
In addition to the mill levies the hospital receives revenue from private insurance providers. According to hospital CEO Nick Goshe these payments traditionally made up a sizeable portion of funding. However, since the Affordable Care Act (ACA) was implemented this revenue stream has dwindled and now provides just 19 percent of revenue. According to Goshe many people were forced into the healthcare exchanges which directed them to Medicaid plans.
Additionally, those who either stayed with a private plan or opted to go without insurance are seeking less healthcare. Goshe said that many patients are not receiving follow up care and testing and are stretching medications because they cannot afford their deductible.
The bulk of funding comes in the form of Medicare and Medicaid payments which make up 60 percent of the hospital’s revenue. Unfortunately, this source is riddled with problems. The hospital only receives 70-72 percent of cost on these patients, and the number of patients utilizing the government healthcare programs is growing. According to Goshe, the expansion of the ACA has tripled Rangely’s Medicaid population, significantly cutting their revenue. To try and fill the gap the state created the Hospital Provider Fee program which initially provided an additional $1.4 million to the hospital. That amount has since dropped to $930,000 and Goshe expects the trend to continue.
The ACA hasn’t just impacted the hospital’s revenue, but also expenses. The implementation of electronic medical records requirements was more than just a large initial cost. The equipment demands regular upgrades and employee hours. Prior to the ACA the hospital employed a part time IT person. They currently require four full time IT employees. Goshe, however, is excited about the cost savings he anticipates in this department from the fiber optic internet. The records system can cost up to $1 million per year to maintain and operate. But once hooked up to fiber, Goshe expects a cost closer to $300,000 per year, a significant savings.
Productivity has also seen an impact from the ACA. It is estimated that doctors have lost 30 percent of their time dealing with the electronic medical record system. In fact, Goshe says that the loss of productivity has been the greatest impact of the ACA. In addition, the hospital has been forced to create a new Department of Compliance to ensure they do not violate any of the many ACA requirements.
To manage the challenges of the ACA and a downturned economy the hospital leadership began making budget adjustments several years ago. Hospital employees have seen cuts in benefits and vacant positions have been left unfilled. However, Goshe says that if further revenue cuts are realized the hospital will be forced to consider larger program cuts.
The hospital currently provides a number of services not typically provided by a hospital including EMS, pharmacy, long-term care, home health and assisted living. They also offer at-cost vaccines for school age students and a weekly clinic at CNCC.
The hospital and clinic prices are set by averaging the costs at other facilities across the Western Slope. “We couldn’t charge the actual cost or people couldn’t afford it,” Goshe said.
Goshe believes that the new building is an asset to the hospital, and that it has helped recruit doctors to the area. He says the new building was built to code with nothing extravagant and that if it hadn’t been built, the state would have shut the hospital down.
Despite the numerous funding challenges Goshe is hopeful for the future of the hospital. He says the best thing that could happen to improve their situation would be for economic boom coupled with a reduction in regulations which would allow people to access private insurance and feel like they could use it.