Dramatic changes in funding for medical services have caused Mountain View Hospital to rethink the way it does business.
>Funding changes forcing local hospital's hand
Over the next few months, the hospital will select one of three options to strengthen its relationship with St. Charles Health System.
"We have been exploring a merger with them, or an asset transfer, or a lease," said Janelle Orcutt, chairman of the MVH Board of Directors.
Changes in the way the hospital is reimbursed by the federal government for Medicare and by the Oregon Health Plan for Medicaid are key factors in the board's plan to negotiate an agreement with St. Charles.
Orcutt explained that Gov. John Kitzhaber and the Legislature passed legislation in 2011 and 2012 that created Coordinated Care Organizations, as a means of reining in escalating health care costs within the state's Medicaid system.
"Looking at his vision, it needs to be more of a region by region payment," she said.
As an example, Orcutt suggested that when someone enrolled in the Oregon Health Plan goes to the hospital and gets an X-ray, the hospital bills the Oregon Health Plan and receives a set fee for the X-ray.
Under the CCO system, there will be a set amount of money for everyone enrolled in the program. "It goes into a big pool to the Coordinated Care Organization; it pays for everything everyone needs in the region," she said. "One thing we do know is the total number of dollars that are available is going to be less under this program."
The Central Oregon Health Council, which has already been formed and approved, will serve the tri-county region, according to Jeanie Gentry, hospital CEO.
"In Oregon, Medicaid is really ahead of the curve for the whole country," she said. "It's already changed and starts to go into effect Aug. 1."
"The regional governing group decides how the money's going to be spent," Gentry said. "They can completely overhaul how everyone is paid -- doctors, hospitals, behavioral health, and dentists -- by 2014."
Gentry, who along with the hospital's chief financial officer is employed by St. Charles Health System, anticipates that there will be substantially less money available to hospital than under the old system. "It will cut 25-30 percent from what they were getting," she said.
County Commissioner Mike Ahern will represent the county on the council, along with Linda McCoy, of Madras, while other county residents will be involved in an advisory capacity, Gentry said.
"It's great in some ways, but it's kind of scary how we're going to be paid in the future," she said, pointing out that about 75 percent of the hospital's business is connected to Medicaid, Medicare, or Indian Health Services, "so when the government changes, it has a huge impact on us.
"We want to do more things to keep people well -- to focus on people's health," she stressed.
Other factors in play
"Another big factor in joining up with St. Charles is, by 2014, we have to have electronic health records in place," said Orcutt. "If we don't meet that deadline, there's a penalty."
"For us, as a stand-alone hospital, it would be very expensive," she said, noting that the cost is estimated at $5 million to $6 million. "If we can be part of St. Charles, it's way cheaper -- about $1 million."
The independent hospital, which has provided care to area residents since 1967, employs about 240 caregivers, and operates with assistance from an operating levy of about 23 cents per $1,000 in taxable property value, which doesn't change from year to year.
"If the hospital isn't owning and operating, that would most likely go away," said Gentry.
Since 1998, the hospital, which is designated as a critical access hospital, has had a management agreement with St. Charles to provide both the chief operating and chief financial officers, as well as some leadership to the board.
Orcutt said that the critical access designation has helped the hospital meet its obligations over the years. "We were reimbursed better," she said. "That's going away in a year."
By joining up with St. Charles, Orcutt added that the hospital would be able to purchase medications "for about 55 percent of what we pay -- a lot cheaper. There are tons of things like that. By consolidation, we could bring costs down."
"The whole health care picture in the United States has changed over the past five years," said hospital board member Mack Gardner. "Consequently, a lot of hospitals -- large and small -- are looking at how they do business. The business model has to change."
Hospital officials have scheduled two public forums to discuss their plans: Tuesday, July 31, at 5:30 p.m., and Thursday, Aug. 2, at 11 a.m., both in the Metolius Conference Room at the hospital. Representatives from St. Charles and board members will also be in attendance.