The latest financial figures for the John C. Fremont Healthcare District were delivered on April Fools Day.
It was no joke.
The district, which includes the clinics and hospital, generated a million dollar loss in February, double the loss from a year before.
In the last eight months, operations have generated $4.8 million in losses.
That is some serious red ink.
The reality is JCF is a critical access hospital facing an evaporating stream of money from both private insurers and the federal government.
If you haven’t been paying attention, these are tough times for rural health care. Any health care for that matter.
And yet, there is important context, and perhaps, some reason for guarded optimism.
For CEO Stacey Kuzak, who’s been in the position for less than five months, it is a sort of everything, everywhere and all at once situation.
Consider last week:
• Another surprise, week-long visit from the federal regulator CMS, this time for the skilled nursing facility, known as the Ewing Wing.
• Managing the complicated financing and construction of a new hospital by 2030, which hasn’t started and may already be five months behind.
• Figure out how to stanch the district’s financial bleeding.
To that end, she recently discovered a processing error that goes back 20 years. In the last few months alone it left as much as $2.6 million figuratively sitting on the table that she still hopes the hospital can recoup.
It was a hell of a week.
February losses
Standing outside the board of director’s meeting during a 10 minute break last week, Kuzak was remarkably candid about the challenges for the hospital, but also her optimism for the future.
As she has said before, she’s in it for the long haul. “I’m not going anywhere,” she said.
Kuzak believes the budget projections she inherited from her predecessor were overly optimistic, which dampens the reality that the hospital is actually performing better in many respects than prior years.
As board member Teresa Johnson said bluntly, “Next year we will use real numbers, based on real information.”
The biggest driver of the losses is reimbursement rates have fallen dramatically from government; think Medicare and MediCal, as well as private insurers. Net revenue is down nearly a million dollars for the last eight months compared to the prior year.
Overall, the district’s financial performance is $83,000 better than the prior year, despite lower operating revenue.
Meanwhile, the emergency department averages about 20 patients per day, up by 6 percent.
Inpatient volumes are also up for the last three months.
The three clinics in the district show a 6 percent decrease in visits in the last eight months, but the main clinic at JCF was up slightly year to date.
When it comes to the construction of a new hospital, the district is still sitting on $9.3 million in restricted cash from the Measure O sales tax, having already spent $3.2 million on architectural drawings, civil engineering plans and the salary and benefits for the project manager.
Money on the table
Kuzak comes from a nursing background, but has gone through a crash course in financing. Along with the hospital’s controller, Waqar Farooq, they have made some startling discoveries.
While digging into a history of denials and rejections she discovered a mix up in National Provider Identifier (NPI) numbers.
NPI numbers are used by healthcare providers and organizations across a variety of healthcare transactions, like billing, credentialing and claims processing.
Health care in America is paid for based on NPI numbers.
But beginning in 2006, provider NPIs were attached to facility NPIs across multiple payer systems without a centralized master list.
Different payer portals were using different NPI numbers.
The district financial consultant, Warbird, had an NPI list that didn’t match JCF’s records, or the records of Quadax, JCF’s revenue cycle manager and billing vendor. It led to increased claim denials, years of mismanagement without identifying the root cause of the problem.
Kuzak has a long list of action items to get the billing cycle on track.
How much has been lost since 2006 in denials and rejections? Unknown.
But you get an idea when Kuzak says at least $2.6 million in claims can still be billed to providers.
Kuzak believes she is finding ways to stop the fiscal hemorrhaging.
Hopefully, in time.
During the April 1 board meeting, the district’s pharmacist, Peter Choi, plainly asked a sobering question: “What happens when the district runs low on cash in October?”
That, he was told, is part of the discussion heading into the next budget cycle that begins in July.
Tale of two loans
JCF has found itself in the unique predicament of being caught between the conflicting requirements of two government loan programs.
The district is currently doing a financial analysis to get a loan from the U.S. Department of Agriculture (USDA) for construction of the new hospital.
For the USDA, the hospital’s losses will be a significant concern.
In the meantime, JCF is seeking a 12-month forgiveness in payments from the California Department of Health Care Access and Information (HCAI), for a distressed hospital loan.
HCAI looks at the $9 million in unrestricted cash JCF has on hand and wonders why it can’t start paying back the loan.
The unrestricted cash position, however, is deteriorating quickly, down $1.8 million in February alone.
Kuzak described it as “teeter-tottering” situation right now.
On the one hand, the USDA needs to know JCF is financially viable.
On the other, HCAI needs to see that JCF is in financial dire straits.
In many ways, both are true.
Responses (0)