Questions and Answers

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13 thoughts on “Questions and Answers”

  1. Is it possible for the proposed Hospital District to be funded by a combination of higher user fees and property tax revenue? This was the model used for funding the solid waste district. Will there be some sort of white paper available on the financial projections and funding options for the proposed Hospital District?

    1. As a single entity with local control, the dump board has authority over fees not available to the clinic or PHD. The Public Hospital District has only one way to raise money at this time. In the future, after the PHD is created, the board will work to set up clinic operations. That will be with a partner or with some combination of contracted services and management by PHD board and hired district administrator. At this point in the process we cannot say which way this will go, but we know that either way we need a dependable, long term source of revenue. The contract with a partner would define financial responsibility of the PHD and how fees will be collected and accounted for at the clinic. Many fees are beyond local control and dictated by federal rules and contracts with health insurance providers.

      As far as a white paper, I believe that it would be an aggregate of the budget, any contract/s for operation, and any related reports. This will be the purview of the elected PHD board.

  2. How will a hospital district impact our current fire department taxing district for EMS? Will the hospital district assume control of the EMS services as on San Juan island?

  3. We do have quite a big number of Island residents, who need and require some sort of physical therapy during treatment in order to get back on feet or back to life. What projects do you have to improve the physical therapy treatment in our very own clinics? How to develop the physical therapy department with the right needed equipment to be an existing highly advanced island resource in physical and cardiac rehabilitation, so that islanders do not have to leave the island for their therapy?
    Thank you.

    1. Prior to the decision by Island Hospital to terminate our relationship with them the Catherine Washburn Medical Association board was working on the details of a clinic expansion, with improvement to PT being a key part of that project. Until a new partnership for the clinic has been secured renovation plans have been put on hold. But the subject of PT services being provided on Lopez are a key component of all our discussions with potential partners.

  4. My background has been in finance for several different health care organizations. My specialty was financial director for large Hospices and Home Care non profits. I have also spent time on the Washburn’s Board.

    I was recently asked to sign a petition for the purpose of acquiring a method for providing funding of the Clinics operating costs through a property tax levy. When asked what the basis for a tax levy was, I was told that the Board did not have any financial information to share as yet, but felt that this tax levy was necessary to cover a worse case scenario.

    Lopez needs a clinic. However, I can’t understand why a tax levy of $500K is required. Island Hospital made money from operating our clinic for years. I believe that Medicare rates for a rural clinic are higher when a urban hospital owns the business, so that may be part of your concern. But shouldn’t you first acquire a “partner” and have a business plan, with budgets, so that people like me can see the documents and then support your proposal?

    1. First – My apologies for not responding to this post from weeks ago. Since I happened to ride the ferry with Joe shortly after he posted his questions and we had a good conversation about his concerns, I tucked it away as ‘replied to’ in my mind. But there has been interest in Joe’s comment and Peggy Means agreed to write a detailed response. Christa

      Why a tax levy may be required: Things are changing in the health care industry. While family practice clinics like ours have been able to operate with a positive operating margin in the past, changes in the way that the government and insurers are paying clinicians have caused revenues to flatten, while expenses continue to increase, primarily due to regulatory changes such as the transition to electronic medical records. In 2016 the Lopez family practice clinic’s operating margin was -1%(-$16,000). For physical therapy it was -8% (-$11,000). Therefore, even with no change in partners we would be facing shortfalls requiring community support for the clinic to continue operations. There are future plans for Medicare and Medicaid to reduce physician payments that are widely anticipated to harm rural clinics. The government is providing tens of millions of dollars over the next three years to consultants to study rural clinics and educate MDs and clinic managers on best practices, hoping to develop solutions that will prevent many of them from closing.

      The decision of Island Hospital to end our operating agreement compounds the difficulty. Currently we receive Medicare payment that are close to the cost of services provided. If we do not operate as a department of a rural hospital, we will receive less than half of the current payment amount that Island Hospital currently receives for our Medicare patients. As you might guess from surveying the number of people with gray hair on the island, Medicare patients comprise about half of the clinic’s total visits. This payment shortfall is estimated at $300,000 to $400,000 per year. Some of that payment is for the hospital’s administrative and overhead costs, and it is possible that we will have lower overhead with a new partner. However, no one believes the clinic will operate with a positive operating margin at these lower rates.

      Currently UW Medicine is evaluating our business and determining whether they want to operate our clinic. They may develop a more favorable reimbursement model than what we can achieve as an independent rural health care clinic. However, they have already made offers to clinics on other islands in the past, such as San Juan, Orcas, and Vashon, and in each case they have required that the community raise and put into escrow sufficient funds to subsidize anticipated transition and operating losses for a two year period. The amount required has been as much as $1M in past negotiations. UW Medicine also will not take on a rural clinic without a long term source of public funding like a public hospital district. We anticipate we will have a pro forma budget from them by the time of the election in April.

      If UW Medicine decides not to operate our clinic, we will need to operate independently for a year or more, while health care systems assess how things will settle out with the repeal and replacement of the Affordable Care Act. This scenario is likely to have the highest ongoing cost, because we will have to purchase from private vendors the services that we have received from Island Hospital. We hired a consultant to work on estimates of these costs and will have a pro forma budget based on industry standards for private clinics within a month. The transition costs will be higher as well, because of the need to hire consultants to help us with credentialling the clinic with insurers, transferring the staff to a new compensation and benefits plan, transitioning to new electronic medical record, order entry and appointment systems, and developing new supply chains and laboratory/radiology relationships.

      Thus, by the time ballots are being distributed, we will have estimates of the cost of ongoing subsidy with either a health system partner or an independent clinic. By the time that the actual levy amount will be calculated by the newly elected commissioners in the fall, we will have actual transition costs and a business plan with future budgets based on the practice model we have selected, which will help the district to determine an appropriate levy rate.

      The reasons we moved ahead now rather than waiting until fall are three-fold.
      First, we wanted to demonstrate to potential partners that our community is willing to provide long term financial support for our clinic if it is necessary. Every health care system we spoke with indicated this would be needed in order to consider a relationship.

      Second, we wanted to have public funds available starting in 2018. If we waited until fall, the funds would not be available through a levy until 2019. Catherine Washburn Medical Association (CWMA) does not have adequate funds to provide ongoing subsidy of operations. The Board has committed to fund the transition to a new partner, but needs to conserve the bulk of its reserves for building maintenance, renovation and replacement. Some parts of the building are now forty years old and need renovation. All of the business models we have contemplated thus far have required that the land, building and ongoing repair, renovation and replacement are the responsibility of the CWMA.

      Finally, we believe it is best to have the Public Health District commissioners in place as soon as possible as we make these business decisions. They will be the ones living with them on an ongoing basis and we want their involvement and support as negotiations proceed.

      (Again, my apologies for the late response. – Christa)

  5. I personally think if possible the Lopez Clinic should come under the umbrella of the University of Washington Medical Center. I have been using the UW medical specialty clinics for years. The UW is one of the top clinics in the USA.

  6. Will the change in the medical affiliation of our Lopez Island Clinic affect our medical insurance coverage? Since it is midyear, I want to be sure that I can continue to have medical coverage for my visits to this Clinic since Dr. Wilson is my primary care physician and this is the closest hospital.

    Thank you!

    1. All the potential partners we are talking to at this time would accept the same insurance carriers as the clinic does now.

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