CCMSD considers rate increases

The impacts of rapid inflation – and the need to fix a situation in which it actually costs Crook County Medical Services District money to see patients in the clinics – has led the Board of Trustees to consider an increase across the board in its charges.

The board considered a proposed annual budget that had been prepared by Zoe Elyada, GL Accountant, at Wednesday’s monthly meeting.

“We clearly need to go in and make some changes before the final budget is given to you, but from our standpoint, I need to know what you guys are willing to accept for an across-the-board increase in our charges so that we can build that into our revenues,” said CEO Micki Lyons.

Board Chairman Mark Erickson responded, “I think whatever it takes to make it balance. If our charges go up, [Medicaid and Medicare] reimbursement goes up – it’s kind of all hand in hand.”

“That’s the problem that all healthcare is having right now, and business in general,” Erickson continued, speaking to the issue of inflation.

Board members agreed that inflation has been rampant over the last couple of years and has forced price increases for many companies.

Trustee Brent Fowler, for instance, stated that he has had to tackle the problem for his own business, Sundance Hardware, because costs are up more than 20%. CPA Mark Lyons of Casey Peterson said he has seen costs rise by around 20% over a 24-month period, too.

“Healthcare is no different,” said Micki Lyons. Inflation also affects staff wages and benefits, she pointed out, because it becomes necessary to pay people more and more to prevent them from seeking work elsewhere that will better meet their financial needs.

“A budget is outdated the second you submit it. You can’t control costs as far as supplies…you can’t control how much somebody is going to increase your utilities, you can’t control how much insurance is going to increase. In my mind, staffing is the biggest thing – it’s a huge portion of your budget, so how do you control staffing so that you have quality employees who are willing to stay and work for you and work hard and work well, but efficiently?” said Micki Lyons.

“It’s a huge expense when you include benefits and wages. We have to have staff and we want them to want to be there, so what things can we do to control that and make people efficient without…making them feel like they’re drowning?”

With this in mind, the question in front of the board was how to balance its budget for the next year.

“Ultimately, what we have to decide, then, is that if we’re going to build [into our budget an] increase in expenses, we’re going to have to figure out what we do with our charges in order to somewhat match that,” she said.

In other words, what comes in needs to match what goes out. If the board decides to build in an increase in expenses to match inflation of, say, 5% or 10%, Lyons said, then this needs to equal the amount of revenue coming in from the district’s services.

“We know that inflation is terrible. We need to figure out what we need to increase revenues by to cover the expenses,” said Mark Lyons.

He felt, however, that a blanket increase would not necessarily be the answer. Not every service area works the same in terms of how it is ultimately paid for, he explained.

Service areas that are paid for primarily through Medicare, such as med surge room rates, for example, are not a good place for increases, he said.

“If you increase charges in a high Medicare-utilized area, all you’re doing is pushing more liability to the patients and creating more bad debt,” he explained.

“We might have to look at some of those areas to say, well, it doesn’t make sense to do an 8% increase in these areas, because it’s all Medicare and we don’t want to create more patient liability.”

Mark Lyons also noted that the district might not see the returns it expects from a larger rate increase.

“Even if you do an 8% increase, you might only get 3%, because you might have some insurance companies that only allow you to go so far,” he said.

He also addressed a problem in which the clinics are actually costing money, rather than making revenue.

“I think we have an opportunity here to fix a problem in the clinics, and this is probably where we’re going to hear comments from the community,” Mark Lyons said.

“Right now, your rates are less than your cost per visit, which creates a Medicare penalty – and those are rather significant dollars. I think last time we looked at it, it was probably $50,000 right there. I think, in the clinics, you’ve got to get as close as you can to your cost per visit.”

Trustee Sandy Neiman questioned how the increases would affect the Long Term Care Unit.

“On the nursing home, you probably want to do a market study,” said Mark Lyons.

“…You’re probably doing that at a good time, because the nursing homes you’re competing with in Spearfish all just had rather significant rate increases…South Dakota just went through a major revision of their rates.”

Discussion was held as to whether there may be other possibilities for the nursing home, such as increasing the number of residents by ten and/or seeking patients who need more specialized care that may not be offered by some of the district’s competitors.

The only problem with the latter suggestion, said Neiman, is that the district would then need to hire staff that specialize in those areas. Micki Lyons noted a further complication.

“We do a lot of dementia care, but we aren’t a locked ward, so a lot of the patients or residents that are needing long term care are Alzheimer’s patients and need a more secured area that we can’t provide,” she said.

Neiman questioned whether hospice services could be added. Micki Lyons confirmed that it can, but that it would be more beneficial financially to run it on the hospital side rather than the LTC side due to the way reimbursement works.

No motion was necessary during the meeting as the budget has not yet been finalized. Micki Lyons stated that she and Elyada will now make adjustments to it according to the input received from the board, to be presented again at the next meeting.