Coast Hospital: Déjà Vu Again

by Malcolm Macdonald, March 8, 2017

The takeaway from last week's Coast Hospital piece was this: In the fall of 2016 Mendocino Coast District Hospital's Chief Financial Officer (CFO) downplayed the seriousness of billing and coding errors made by the newly contracted Emergency Room (ER) provider in official report after report to the hospital's Board of Directors and its Finance Committee. In addition, both the CFO and the Mendocino Coast District Hospital (MCDH) Chief Executive Officer (CEO) ignored internal warnings to add employees to sort out the billing and coding mess.

Moreover, dating back years before the current CEO and CFO joined MCDH (respectively April and September, 2015) the hospital has missed one opportunity after another to pad its revenue, which could have been achieved simply by billing for routine charges in practically all clinical areas of the facility. MCDH performs services that are part of everyday, normal care, but those procedures have not been charged or billed due to incomplete documentation.

A simple example: a patient in “Observation” status is charged an hourly care charge and nearly all those patients receive intravenous (IV) infusion for most of their time in the hospital. In this day and age “Observation” is technically classified as an outpatient. MCDH could charge, bill, and be reimbursed for each hour of infusion the patient received. The initial IV hour would amount to a charge of about $420, with every subsequent hour charged at approximately $180. The only documentation necessary to substantiate the charge is the time the infusion was started and the time it was discontinued, two small entries in the medical record. Considering most patients are under “Observation” status for more than twelve hours that potentially could generate serious cash in the MCDH till. If any other medications are given through the IV and documented with the time given, that's somewhere in the neighborhood of $80 - $100 per drug, per dosage.

Similar examples could be applied to almost all departments within MCDH. Administrations past and present have seemingly been apprised of this. Apparently, the closest administrators have come to implementation is the phrase, 'we'll look into it.' Of course, there has been no overt action that indicates they have.

A source outside the hospital, who nevertheless is familiar with the situations at MCDH, contributed this opinion, “Why would anyone be surprised that there are lots of small item [billing] details being missed when even the big, most obvious macro business issues are being severely mismanaged. If you can’t manage the big stuff, you certainly aren’t managing the small stuff.”

Also, from an outsider's view, “Beware [the month of] June. There are some big payments due, including a Stark violation payment, another payment remaining from deferred payments in the bankruptcy settlement, and the pension payment. It does not appear they have been accruing towards those payments. On top of that, there is still the outstanding $2+ million owed Medi-Cal.

Realize that if it wasn’t for the IGT [intergovernmental transfer] and other one-time payment events the hospital would already be in bankruptcy again. Note also, that the way the hospital used to fund the pension payment was the annual settlement from Medi-Cal would be received a month or so before. This was usually a positive settlement for the hospital as Medi-Cal classically only paid 80-85% until the settlement. My guess is that with the outstanding Medi-Cal debt, that won’t happen this year. That’s my guess as to why they are feverishly trying to borrow money.”

Then there is the issue, or issues, surrounding the obstetrics (OB) department. MCDH's administration has not been hesitant to declare it  a million dollar a year loser. Yet at multiple Finance Committee meetings the CFO has flatly refused to give any comparative profit or loss numbers for the new ER, a new orthopedic surgeon, or the pain management program that came on line last year.

MCDH will begin working on its 2016-2017 budget during March. We shall see what we shall see. We will also attempt to discover why the Chief Human Resources officer and another long time department manager left MCDH ever so abruptly in the new year.

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