OHH Revenue Rises, Adjustment Hits Bottom Line

Olney Hamilton Hospital’s revenue is climbing, but so are its quarterly losses, thanks to a single unusually large insurance adjustment in May, according to the financial report finance committee chairman Lonnie Rue delivered to the board at its July 31 meeting.

Mr. Rue told the board the hospital’s outside accounting firm, Forvis Mazars, had just completed the hospital’s annual audit, calling the results “a good audit” but cautioning that “this coming year’s gonna be a little challenging.”

For June, the hospital posted an operating loss of $138,000 and a net loss of $161,000. Yearto- date, through June, the hospital has an operating loss of $743,000 and a net loss of $585,000 — compared with a much smaller net loss of just $38,000 over the same period last fiscal year.

Gross patient revenue for the year to date stands at $23.6 million, up $2.7 million, or 13 percent, from the prior year — which Mr. Rue called “a very healthy increase.” Nursing home Quality Incentive Payment Program (QIPP) revenue is up 45 percent year-over-year, to $999,000; Ms. Siegert attributed the jump to improved tracking of care metrics.

Total operating revenue for the year stands at $8.2 million, up about 3 percent from last year. But total operating expenses rose faster, up about 13 percent to $8.9 million, which is what pushed the hospital into an operating loss for the year so far.

Net patient service revenue represents 29.5 percent of gross patient service revenue. Separately, charity care and bad debt combined equal about 11.5 percent of gross revenue — a figure board member Ron Rogers noted translates into several million dollars in care the hospital provides but doesn’t get paid for.

Mr. Rue said an $800,000 contractual adjustment posted in May — several times larger than the roughly $200,000 the hospital typically sees in a given month — is the single biggest driver of the year-to-date loss, and he expects its effects to linger through the rest of the fiscal year. Contractual adjustments reflect the gap between what the hospital charges and what Medicare, Medicaid and private insurers actually agree to pay.

Ms. Siegert said the hospital does expect a partially offsetting benefit later this year — likely showing up in September or October — from a Medicare “true-up” set- tlement process, projected to add at least $100,000 to the bottom line.

Board members spent significant time discussing longer-term pressure from Medicare Advantage plans, which several board members said are increasingly squeezing the hospital’s reimbursement rates. As a critical-access hospital, OHH’s payment rates are tied to the percentage of its patients on traditional Medicare — and as more patients shift to Medicare Advantage plans instead, that percentage falls, which in turn lowers the hospital’s negotiated rates.

“We’re gonna have to figure out how to... stay in business with less reimbursement,” Mr. Rogers said.

Board chairman Dale Lovett said the Texas Organization of Rural & Community Hospitals (TORCH) and the Texas Hospital Association are actively lobbying in Washington to have Medicare Advantage patients counted the same as traditional Medicare patients for critical-access hospital cost reporting purposes, but said that effort has not yet succeeded.