Meeting held on sales tax issue for Piggott Community Hospital

Wednesday, February 10, 2010
The future of Piggott Community Hospital could be in the hands of local voters, as the city will be seeking a sales tax to offset a downfall in revenue at the local facility. (Times file photo)

A special meeting of the Piggott City Council was held Monday night with administration of the local hospital. At issue is a continuing decline in revenue for Piggott Community Hospital and how to offset those declines in an effort to keep the local facility viable. At the conclusion of the gathering council members agreed to proceed with setting up a special election to consider a one-cent local sales tax. If approved, the funds generated from the tax would help with the shortfall.

Hospital administrator James L. Magee hosted the meeting and gave a presentation that reviewed how the situation was created.

"We've seen a steady decline in patients admitted, with that number dropping from 734 in 2008 to 660 in 2009, or a drop of about 10 percent," Magee noted.

"There are a lot of variables, but much of our Medicare billing is based on our patient census," Magee added. "We experienced a drop of 345 patients in our patient census from 2,751 to 2,406, in the past year and that equated to a loss of about $317,000." He also added that the numbers for in-patient skilled care have also dropped, falling from 2,109 in 2008 to 1,875 last year. "That drop of 234 patients meant a loss of about $208,000 for the hospital," he added.

But, according to Magee, bad debt continues to be a major problem for the local facility. "In 2004 our bad debt was $745,000, but that climbed to over $1.5 million in 2009. Although revenues were up some 30 percent, our bad debt doubled with most of that coming through the emergency room."

Magee also noted that changes in federal law have also cost the hospital through their durable medical goods sales. "We've got 141 patients on oxygen, but a change in the law effective Jan. 1, 2009, set up a three-year rule and now only 88 of those patients have the service paid for by Medicaid."

"The ambulance service is also operating at a deficit, and lost about $150,000 last year," he added. "We keep two crews and trucks available during the week and a single crew and truck on the weekends, but we're paid by the trip and there are no community subsidies paid to maintain the service. A lot of the time is downtime, but we have to be ready."

Magee also said keeping the E.R. open is a big expense. "We have to have certified people, we keep a doctor on hand all the time and x-ray technicians and such -- it's a big expense." According to the most recent numbers it takes about $40,000 to keep the hospital open and operating each day.

"The hospital is also punished for being in a border region and, when dealing with patients with a Missouri address, we're forced to accept less than cost on Medicaid," he noted. "With Arkansas Medicaid patients we are paid just what it costs us to provide the service, but we only get a portion of that with Missouri patients." Magee added that some 40 percent of the hospital's patients have Missouri address and noted that, while they are an important asset to the hospital, the billing issue continues to cause problems.

Facing a loss of revenue of more than a million dollars this year, the hospital has made some cuts, but will be looking to city residents for some help in the future. "We have reduced payroll and employee benefits, have gotten our census up some and are making other steps to try to offset the shortfall," Magee added. "We're a critical access hospital, one of 29 located in the state of Arkansas," Magee added. "Of those 29 we are one of only two that do not receive some type of sales tax assistance either from their city or county."

Magee said the Cross County Hospital at Wynne benefits from a one-percent sales tax, which generates about $1.75 million per year for operations. The Howard County Hospital at Nashville gets about $1.5 million from their tax issue, while others have a lower tax rate such as Lawrence County Memorial at Walnut Ridge with a three-tenths of one percent tax rate that generates about $900,000 a year.

Following Magee's presentation Mayor Gerald Morris addressed the city council. "I outlined several points concerning the hospital that I feel are very important," Morris noted. "The first, of course, is the advantage of top quality health care in our community, the second is the huge economic impact the hospital has as the biggest local payroll and third is the fact that the hospital is our city-owned utility company's biggest customer, but most importantly is providing health care to our residents."

Morris indicated that each member of council was asked to address the issue and give their feedback. "There were some issues raised, and some questions answered that had come from various residents," Morris noted. "But I feel that everyone there knew that we cannot lose this hospital, it's just too important to Piggott."

At the conclusion of the meeting aldermen agreed to allow city attorney John Lingle to draft an ordinance that will set the date for a city-wide election. "Prior to the election we'll be holding a public meeting that will allow any and all to come and ask questions about the hospital or the sales tax issue," Morris added.

Based on 2009 sales tax numbers a one-cent tax would generate about $340,000. "We know that a sales tax will not be enough to save our hospital, but they'll also be cutting their budget and making other changes too," Morris added.

The mayor also indicated that he will likely call a special meeting to approve the ordinance setting up the election, once the document has been drafted. "This is something we need to move on as soon as possible," he surmised.

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  • I'm not familiar with Arkansas law on this, but are there other options to explore? I think the people using the services should pay more. Just passing a law that results in non-users also paying isn't fair. You need the service, thus you have to pay for it. No one knows when they will need the service, but those that never will should not be penalized.

    The second commit I have is, show everyone the complete open books of the hospital. What each level earns, and where the exact cuts were made.

    Has the executive level taken pay cuts? Could they? The country is in a recession. Ten percent or more unemployment in many areas is common. Earn less or lose your job may be an option, as unpopular as it may be.

    -- Posted by Arkypig on Thu, Feb 11, 2010, at 11:59 AM
  • I would like to start off by saying how important the Piggott Community Hospital is to our community and its residents. The loss of this institution could have a negative socioeconomic impact on the area. With that said, I also feel that there are several questions regarding the managment of the facility.

    1. Is the staffing appropriate for the patient census/volume? etc nursing, radiology, lab.

    2. How much is spent on consulting services?

    3. Ambulance service would be more econmical if outsourced.

    4. Most hospitals income is based on their outpatient diagnostic services, do our local physicians utilize this?

    5. What is the referring physician market for your testing?

    6. Are the physicians employed through the hospital or self sufficient?

    7. The hospital board should be elected by the community. Members should have knowledge/background in healthcare, which could save/eliminate money spent on consultants.

    8. Acounting audits done internally should be public knowledge if the community supports the sales tax increase.

    9. With new Medicare cuts, are the billing staff current with procedures to capture maximum revenue?

    -- Posted by HealthCare on Thu, Feb 11, 2010, at 1:39 PM
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