Coast Hospital Falls Behind

by Malcolm Macdonald, March 1, 2017

The Mendocino Coast District Hospital (MCDH) Board of Directors have denied Dr. Peter Glusker's attempt to have his recent censure rescinded. Glusker was censured by his fellow board members in January for hitting Reply ALL on a December 30 email rather than sending a one person message to the Hospital Board's Executive Assistant. The email in question stated, “Closed session agenda does not list the item Mr. Ruprecht [legal counsel to the MCDH Board] said he would report on at this meeting about follow-up on Ellen Hardin's emails and allegations of harassment and possible fraudulent billing problems. I believe the board needs a report at this time on those matters.”

Ms. Hardin was then MCDH's Chief Human Resources Officer. More or less since the time of Glusker's censure in January Ms. Hardin became invisible. Queries posed to reliable sources in and outside the hospital appear to disclose that Ms. Hardin is on some sort of leave at present and that she will no longer be employed at MCDH in the future.

Further questioning here and there reveals that the somewhat ambiguous wording in Dr. Glusker's email means that Hardin's communications (emails) concerned alleged workplace harassment of her, presumably by someone higher up the chain of command at MCDH. The “Closed Session” agenda for the MCDH February 23 board meeting contained the item “Conference with legal counsel regarding personnel claim against the District. Government Code 54956.9(d)(2), (e)(3).” Whether this item has anything at all to do with Ms. Hardin is unknown at this point.

Conjecture regarding the accidental nature or deliberateness of Glusker's email SEND remains split, though it is interesting to note that Glusker sent it from a personal email address and not the MCDH email address often used by board members. Which leads to the question, if Dr. Glusker deliberately sent the email out to more than 50 non-Board member recipients, why would he have done so? Frustration that information was being kept under wraps within MCDH would be the most obvious answer.

We've already alluded to the possibility that the Chief Human Resource Officer at MCDH may have been the victim of workplace harrassment, but the other part of Glusker's December 30 email used the words “fraudulent billing problems.” At the February 23, 2017 MCDH Board meeting, legal counsel John Ruprecht reported that the accounting firm WIPFLI (the title derives the company founder's surname) had found no evidence of fraud in MCDH's practices; however, WIPFLI was nevertheless retained by a vote of the MCDH Board as a consultant for periodic medical record and billing compliance review.

If that sounds like something is out of whack then it's time to take a look back to Chief Financial Officer (CFO) Wade Sturgeon's early November financial report given first to the MCDH Finance Committee then to the full MCDH Board of Directors. In the narrative portion of Sturgeon's report he states, “Unfortunately we are still dealing with some transition pains associated to the switch to EmCare in our ER. At the end of September, we were 60 days post implementation. We anticipate this challenge to be neutralized by the beginning of November. but unfortunately it has taken us about 90 days to get our processes in place working alongside of EmCare.”

If we go back further, to the CFO's report to the Finance Committee on September 27 of last year we find Mr. Sturgeon saying, “Due to complications with the ER transition, we had issues with billing and getting charges into the system. We believe that the initial issue was fixed in September and we will have some charges for services rendered in August that hit the September income statement. The amounts were not deemed large enough to manually input to the August income statement due to the amount of time and effort it would take.”

Remember that phrase “compliance review” was part of the reason MCDH is retaining WIPFLI? Medicare requires hospitals like MCDH to be at an 85% or higher level of compliance in billing matters. For the first seven months of 2016 MCDH had no problem maintaining that standard, but when the outfit known as EmCare began running the MCDH emergency room (ER) on August 1, 2016, and subsequently took over coding and billing practices for the ER that billing compliance percentage dropped to 39% for the month.

Keep in mind that part of the reason EmCare won the ER contract at MCDH was a promise to provide an overall increase in revenue for the hospital to the tune of $4.1 million if EmCare took over coding and billing matters in the ER, resulting in a potential cash collection increase of slightly less than $2 million annually for the hospital. Obviously EmCare's ability to code, especially for Critical Care practices, was a bit lacking. Also keep in mind that CFO Sturgeon knew about the massive drop off to 39% by mid-September, but at the end of that month he told the hospital's finance committee, that “the initial issue was fixed in September,” and “the amounts were not deemed large enough…” These statements create an issue not only of transparency but trustworthiness.

What's at stake monetarily as a result of this sort of 85% slide to 39%? Pretty simple: Medicare can threaten to cut off what are called periodic interim payments (PIP) to the hospital. This can amount to serious money in no time, anywhere from $4 to $7 million yearly at MCDH.

It has come to this writer's attention that by sometime in November both CFO Sturgeon and Chief Executive Officer (CEO) Bob Edwards were aware that it would take extra manpower to sift through the backlog of EmCare billing mess-ups, yet these sorts of positions were not created until January.

Speaking of January, 2017, let's take a look at the Finance Committee meeting held on the fourth day of the new year, recalling CFO Sturgeon's remarks from two months earlier that he anticipated the “EmCare challenge to be neutralized by the beginning of November.” In Sturgeon's 4th of January financial narrative he claims, “We have cleaned up the major issues associated to EmCare.”

Yet MCDH is contracting with WIPFLI to oversee a billing compliance review at a cost of $15,000 per quarter minimum. Something smells here. Reports from in and outside the hospital indicate that the kind of errors EmCare made back in August are still occurring, lots of coding errors. Getting the codes correct makes a huge billing difference in dollars. For instance, if someone comes into the ER for an arm injury that requires a splint, but the code for an Ace bandage is recorded instead, the result is a significant dollar difference. You have these errors over and over, then we're talking major amounts per shift, per week, per month.

These errors may not rise to the level of billing fraud; however, if reports that EmCare's billing and coding errors have continued into 2017 prove accurate, contrasting with the CFO's contention that those issues have been cleaned up, then there's some serious explaining to be done.

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