Greetings everyone. The summer season has just flown by – again! School is back in session, fall sports have had their first games, and the Old Threshers Reunion is starting this week. We even got to see the incredible solar eclipse of last week.
The health center is assessing and implementing some minor upgrades to our facility. In the month of September, we will begin the work to replace the roof of our Park Place Elder Living facility. We look forward to working with Brockway Mechanical and Roofing who was awarded the project in July. The health center has also been planning on the potential of remodeling three different clinic areas within the health center. The health center is planning this project for three key reasons: for our patients, for our providers and for our future. We are currently looking at the remodeling of the Physicians & Clinics space at HCHC where the HCHC specialist providers (Dr.’s Smith, Tansey and Tansey and Kendra Bonnesen and Kari Payne) have clinic, Family Vision’s past clinic suite location, as well as the outreach specialty provider location. Plans are to move women’s health providers to the former Family Vision suite location, with the outreach providers moving to the current HCHC specialist provider location, and then moving orthopedic and general surgery specialties to the current outreach provider clinics. This move allows for future growth of specific services and enhances access for our patients. We look to bring this project for the board’s review in the coming months for potential approval.
At the recent Board of Trustees meeting in July, administration reviewed with the board the financial performance of the health center as we closed fiscal year 2017 (July 1, 2016-June 30, 2017). The health center this past fiscal year lost nearly $1.8 million from services provided by the health center. After we included our investment dollars performance and property tax support we ended the fiscal year at a positive $277,000. The challenging part of our past fiscal year is that we actually saw growth in volume in specific areas where we had an increase in gross revenue of nearly $4 million compared to last fiscal year. Unfortunately, that large of an increase in revenue only equated to approximately an increase of $134,000 in cash receipts from the year before.
You may be asking how is this possible? A number of things contributed to this. First, is the change in the percentage of the revenue from different insurance companies of our patients that we serve here at the health center. Approximately, 46% of our patients have Medicare, 19% have Medicaid, 25% have Blue Cross Blue Shield, and 5% have commercial insurance. The remaining 5% are private pay. This is a change from seven years ago where this percentage was approximately 44% Medicare, 10% Medicaid and 26% Blue Cross Blue Shield, 10% Commercial and 10% private pay. To quickly summarize, for approximately 65% of the services we provide today, payment for these services will not cover our costs to provide those services.
Another significant factor in the financial performance of the health center this past year was the change in how the Iowa Medicaid program is administered in the state of Iowa. Since the transition of Iowa Medicaid to the three private managed care organizations (MCO’s), we estimate our decrease in payment has been nearly $1 million for the same level of service. Those, along with some other contributing factors, resulted in our finances at the end of fiscal year 2017.
In order to respond to our most recent fiscal year, the $77 million reduction the state of Iowa implemented this past legislative session, and the looming health care decision to either repeal or replace the Affordable Care Act (Obama Care), we spoke at the July board meeting of setting a goal to reduce our expenses and to improve our efficiencies by 10% by the end of the next fiscal year. This is a reduction of costs by approximately $3 million. As an organization we will need to get there, especially if the federal government approves a health care bill that significantly cuts the Medicaid program as proposed. The cuts that have been proposed and are seriously being considered are nearly $840 billion to the Medicaid program. The American Hospital Association has estimated the impact to Henry County Health Center if these cuts were to go into effect is a reduction in reimbursement of nearly $3 million per year. This equates to an almost 10% reduction of the health center’s revenue. Thus, our time to respond and plan is now.
We are working strategically with our leaders, associates and medical community to assess and implement changes throughout the organization. This work ties in nicely with the most recent strategic plan that was approved by the Board of Trustees earlier this summer. We are confident with the necessary and appropriate evolution of our services that the health center will be successful in providing care and services to the residents of Henry County for another 96 years.
To conclude on a much more positive note, I would like to congratulate and thank the forty-one associates who were the career ladder recipients this past fiscal year. These associates work to make HCHC a better place each day they are here. They identify the opportunities to do more and to contribute to the overall success of the organization. Thank you all for making a difference.
Thanks again for taking the time to read our e-newsletter. As always, I hope you find it informative and helpful for your health care. If you should happen to have any questions, please feel free to contact Shelley Doak or myself and we will be happy to follow up with you.