Cash flow problems have again been ailing Wrangell Medical Center, with the public hospital putting forward a request for $250,000 to the city on Tuesday.
At its own board meeting on October 18, WMC’s chief financial officer, Doran Hammett, explained the situation. Cash on hand had by the end of September dropped to $311,069, down from $838,604 at the start of the fiscal year on July 1. It costs around $28,000 a day to operate the hospital, meaning WMC had only around 11 days’ worth available for its payroll and other expenditures.
The hospital is a public asset, though its finances have historically been independent of the city’s budget. But on November 2014 WMC had alerted the City and Borough Assembly to an impending crisis after its available cash reserves had dipped to six days’ measure. Addressing its cash flow, the hospital has since taken on a new accountant and trimmed expenditures where possible, also farming out its billing operations to a private company, TruBridge.
In the event of future emergencies, hospital administrators approached the Assembly in July 2015 with a request for a line of credit of $500,000, which instead of being set up through a bank would be facilitated through city reserves. Under that arrangement, it was reasoned the hospital would not need to pay interest on any money it borrowed. The arrangement was to be revisited and renewed on an annual basis.
Since February 2016, the hospital has only taken out around $150,000 from the account, paying down the sum in installments through this summer. Before it can withdraw the $250,000 it would need by Wednesday, the Assembly would need to vote to renew its line of credit.
There had been a couple of factors primarily behind the shortfall. Looking over the first fiscal quarter, which began in July, Hammett reported that every statistical value for the hospital has so far been down over the previous fiscal year. Patient admissions have been lower than expected, contributing to an eight-percent decrease in net revenue.
“That’s what’s driving the financial numbers,” he explained.
Cash flow concerns have also been driven by the hospital’s accounts receivable, or the procedures and services it has billed out but which have not been collected, with slowdowns in Medicare and Medicaid repayments. Hammett explained items that usually would be cycled through within 14 days had been taking more than 30 or even 60 days to process.
“It was a real anomaly,” he said. “That’s what brought this to light.”
Following the hospital board’s meeting, the next day Hammett had a conversation with TruBridge, the firm handling the hospital’s billing. Problems with the accounts had been traced back to coding errors, which had caused some accounts to idle. The medical coders themselves had not been at fault, but some of their codes had been lost in translation during the billing process, Hammett explained.
“It was just an internal issue,” he said. It was hard to say how much revenue had been impacted by the errors, but the hospital will be working with TruBridge to rectify the situation over the next month. “If they start fixing that today, we should see the impact of that pretty quickly.”
If renewal of the line of credit is approved by the Assembly Tuesday evening, a check to WMC from the city’s general fund would be debited by Wednesday morning.
In other hospital board business, CEO Robert Rang announced the hospital’s long-term care facility had been awarded a five-star rating for the second year in a row. The team has added a new coding lead for its health information management staff, Constance Harris. She arrived on October 16, relocating with her family from Kotzebue. Laboratory staff can also look forward to the return of Vincent Balansag, who will be returning with his family from the Philippines on November 7. Agency staff had been used to cover some of his work during the absence, which began in January.
Following municipal elections earlier this month, board members welcomed Jennifer Bates and Rebecca Christensen to their number. Recently reduced from nine members to seven, the board still has one vacancy to fill. During last week’s meeting, member Patrick Mayer was elected the board’s president, with Olinda White appointed vice president in absentia.
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