OMC could lose $1 million if ‘fiscal cliff’ talks fail

By Joe Smillie
For Peninsula Daily News

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PORT ANGELES — With Medicare paying for 57 percent of Olympic Medical Center’s patients, cuts could “devastate the health care delivery system” of OMC, Chief Executive Officer Eric Lewis told hospital commissioners last week.

Congress has until Dec. 31 to avoid deep cuts to Medicare and many other federal programs laid out in the Budget Control Act of 2011, the deal reached by Republicans and Democrats after last summer’s debt limit debate.

If the two sides can’t reach a deal before the end of the year, OMC — which is based in Port Angeles and operates a complex in Sequim — could lose more than $1 million in Medicare payments.

Lewis told the commissioners at their board meeting last week that Sequim and Port Angeles have about 16,000 residents who receive Medicare.

“The majority of our patients are covered by Medicare,” he said, “so anytime they [government officials] touch it, it has an enormous ripple for us.”

The cuts put together as part of last year’s debt limit deal would slice reimbursements from Medicare to physicians by 26.5 percent, Lewis said.

Lewis expected that physician payment cuts would be restored by Congress in the new year but worried that cuts in Medicare reimbursements to the hospital would be used to cover the expense.

“Do you want your right arm cut off or your left arm?” Lewis asked rhetorically.

OMC’s board of commissioners built its $139 million 2013 budget with the expectation that the automatic 2 percent cut to Medicare payments would take place Jan. 1.

Lewis said the cut is expected to cost OMC $100,000 every month, or $1.2 million for the year.

If the funding is restored next year, the hospital likely will use it to plug programs it cut to balance the 2013 spending plan, Lewis said.

An additional $200,000 to $400,000 in annual funding could go away with the elimination of “hold harmless” payments that fill gaps in funding the hospital receives from Medicare for outpatient services, he added.

To counter, Lewis said, the hospital is lobbying the state’s two U.S. senators, Patty Murray and Maria Cantwell, both Democrats.

“They’ve received literally hundreds of letters from us,” he told commissioners.

Lewis said the hospital also is lobbying state legislators to protect the funding it receives from Olympia.

Most of the hospital’s state funding comes from Medicaid, which is funded 50-50 by the state and federal governments.

With the state’s budget still tight, funding for sole community hospitals, a classification of which OMC is one of just four in the state, may be on the table, Lewis said.

Sole community hospitals are those that serve a population that does not have another hospital within at least 35 miles that offers similar services.

A contingent of OMC officials met with 24th District state Reps. Kevin Van De Wege and Steve Tharinger, both D-Sequim, to ask them to stress the importance of state funding to the hospital when the Legislature convenes Jan. 10.

“I don’t foresee them having a problem with the funding they receive. Funding for these sole hospitals is not usually a target,” Van De Wege said Thursday.

“But it’s something we are going to keep our eyes on to make sure it doesn’t become one.”

Tharinger, a member of the stateHouse’s Health Care and Wellness Committee, said OMC’s classification as a sole community hospital puts it in a tricky funding spot — too big to receive urban hospital funding and too small to get rural funding help.

“My view is we’re underfunding these sole community hospitals. We’ve got to find a way to make the pie bigger,” Tharinger said.

“There may be something we can do to improve the hospital’s reimbursement rates because of the importance of OMC to the health care system of the North Olympic Peninsula.”

Lewis said he plans to meet with state Sen. Jim Hargrove, D-Hoquiam — also of the local 24th District — before the Legislature
convenes Jan. 10.

The 24th District covers Clallam and Jefferson counties and part of Grays Harbor County.

As it prepares to implement the $7.6 million Epic computerized records system, OMC is upgrading other equipment to match the system.

Epic was purchased earlier this year to give the hospital a system to maintain health records electronically.

It is scheduled to go into action May 4.

Also last week, commissioners unanimously gave Chief Nursing Officer Lorraine Wall the authority to finalize the purchase of a new program and equipment that will track how pharmaceuticals are dispensed to patients.

Wall said the Pyxis equipment will provide a much-needed upgrade to the hospital’s pharmacy records and will have a digital “interface” with the Epic system.

The cost of the purchase was $667,940, with a monthly maintenance fee of $2,768.

Wall said the hospital budgeted $819,875 for the purchase.

The hospital in September purchased $1.5 million worth of hardware to accommodate the system.

In other action, commissioners also approved a salary increase for gastroenterologist Frank Jahns.

Rebecca Corley, the hospital’s chief physician officer, said raising Jahn’s salary to $375,000 would bring his pay into the 25th percentile of gastroenterologists with his level of experience.

Last modified: December 24. 2012 5:52PM
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