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[March 30, 2014]
Quincy hospital profit concerns state auditor [Columbia Basin Herald, Moses Lake, Wash. :: ]
(Columbia Basin Herald (Moses Lake, WA) Via Acquire Media NewsEdge) March 30--QUINCY -- Officials with the Washington Auditor's Office expressed concern over the financial situation of Quincy Valley Medical Center. The hospital received a warning on its financial condition in its annual audit, released Thursday.
This is the second year the auditor's office issued a warning, called a finding. In its response, hospital district officials said they were looking at ways to reduce the shortfall.
"The (hospital) district has insufficient revenue to cover operating expenses, increasing the risk that it will not be able to continue services at current levels," the auditor's report said.
Hospital officials replied in a letter that was included in the report. The hospital's problems stem from reduced reimbursement, including a cut in Medicare reimbursement in April 2013, and increased deductibles in other insurance plans, the letter said. There's also bad debt, and hospital officials said some of that came from concerts at the Gorge Amphitheater.
Hospital officials are asking the amphitheater owners, Live Nation, for some kind of reimbursement for patients who attend concerts, get treated at the hospital but don't pay the bill, the letter said.
The hospital's board of directors is discussing the submission of a "levy lid lift" to district voters. Each junior taxing district has a maximum assessment, and the levy lid lift would allow the district to collect an amount closer to its maximum assessment.
"Also in an effort to spread the financial burden of funding the hospital's operations, QVMC has approached the city to take over a portion of the warrants currently held by the county," the letter said.
Grant County Treasurer Darryl Pheasant said in that situation a city, in this case Quincy, would buy some of the warrants from the county. "I pondered six months ago, can cities do this?" he said. He couldn't find any statutes prohibiting it, he said.
Pheasant argued that the City of Quincy benefits from the hospital, including using the hospital in business recruitment. In addition, Pheasant said he argued the city could earn more money by investing in warrants.
Quincy Mayor Jim Hemberry is out of the country and could not be reached for comment.
"About all I can say is, we're considering it," Quincy City Administrator Tim Snead said. The city is working on a water system project, and city officials are hesitant about tying up city money, he said.
The hospital has struggled with cash flow and profitability, and has been forced to borrow money from Grant County to meet financial obligations, a process known as registered warrants. The loans are paid back with interest.
But Quincy medical center hasn't been able to pay off its warrant balance, and has been carrying a deficit since at least 2009. The hospital district owed Grant County $2.8 million at the end of 2012, and about $3.5 million at the end of 2013, according to the audit report.
The hospital has been faced with reimbursement cuts and an increase in bad debt, the report said. The combination of reduced revenue and bad debt was $4.9 million at the end of 2012, it said.
"Although the district has streamlined operations and improved cash collections, it has not been successful in improving its financial health," the report said.
While the hospital showed a net loss at the end of 2011, hospital officials made some changes which resulted in a net profit at the end of 2012, the report said. But that didn't solve the district's need for warrants, the report said.
The audit report recommended the hospital's board review the district's strategic plan to address some of the financial issues.
___ (c)2014 the Columbia Basin Herald, Wash.
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