Hearing held on PCH sales tax issue

Piggott businessman George Forrest was one of the many individuals who spoke at Monday night's public hearing on the hospital tax issue. The hearing was hosted by the Piggott Health Care Facilities Board in conjunction with the city council in an effort to educate the public on the subject. (Times photo/Tim Blair) [Click to enlarge]

City officials were expecting a big crowd at Monday night's public hearing on a proposed one cent sales tax to benefit Piggott Community Hospital. But, no one expected nearly 250 people to be on hand for the event.

The public hearing, and subsequent meeting of the city council, was called to gain input from the community on a proposed 36-month one cent local sales tax and place the measure on the May 18 primary election ballot. The meeting was co-hosted by the city council and members of the Piggott Health Care Facilities Board.

Mayor Gerald Morris opened the public hearing with a word of welcome and explanation for those in attendance. He then turned the meeting over to hospital board chairman Tom Sneed, who introduced administrator James Magee.

A Powerpoint presentation was then given on the current financial state of the hospital, with emphasis on how the local facility came to be in financial distress.

"During the period of 2004 through 2009 our revenues have grown about 30 percent, but our bad debt is up over 100 percent," Magee explained of the shortfall. "About 75 to 80 percent of that comes through our emergency room, but we cannot refuse treatment based on anyone's ability to pay."

Magee also said the ambulance service continues to lose money and adds to the deficit. "We lost about $150,000 through the ambulance service in the past year and, although many of the hospital operations are very profitable, we are looking at overcoming about $1.675 million just to break even."

Magee also addressed the issue of cost of administration, noting the hospital has just over 20 staff in the administration office. "Our administrative salaries for 2008 totaled just under $614,000 with fringe benefits of $127,336 -- we cut that to $589,459 in 2009 and the fringe benefits dropped to around $95,000. Based on our adjusted patient days the cost per day to maintain administration was fallen to $30.64," he explained.

"When you compare that to other Critical Access Hospitals it's very low. The state provided us with several examples and the lowest of our peer hospitals was $54.61 with most of the other similar facilities spending between $60 and $110 per day for administrative costs."

Magee also outlined the positive aspects of the hospital's situation, noting the home health and durable medical goods efforts are very profitable -- but not enough to make up for the shortfall in other areas. He also noted that much of the problem stems from the way Medicare calculates payments, which includes a large penalty in repayment for patients that live in the state of Missouri.

"A little over 40 percent of our patients live in Missouri, and we appreciate them, but we are penalized on Medicare payments due to our location here along the state line," Magee added.

It also was noted the hospital has continued to receive good marks when it comes to the quality of care offered. "Our hospital was ranked fourth out of 28 Critical Access Hospitals in the state in appropriate care measures," Magee said. "Actually, there were three tied for first, so we were effectively second among those, but we were also ranked sixth out of 74 such facilities statewide for our care of patients."

Magee also reiterated that PCH is one of only two of the 29 Critical Access Hospitals in the state that does not receive some type of financial support from either the city or county in which it is located.

Following the presentation, Sneed opened the floor to questions and comments and dozens of residents were heard. The consensus among those speaking was that the city needs the hospital and that they would support the passage of the sales tax issue to keep it open. But those on hand also voiced concern that the situation wasn't brought to light sooner.

"I'm all for the hospital, and I'm not against this sales tax, but how long have you (the hospital board) known that there were problems?" Bill Gookin inquired. "I think the public should have been informed long before it got to this point." The sentiment was echoed by several others in attendance.

"We saw this coming," hospital board member Danny Brown noted. "Several years ago we were sitting on a nice surplus, but it kept falling each year. It just got to the point where we knew that something would have to be done, and that's what we're doing now."

"Will this be enough?" asked Rosemary Janes. "Or are we going to have to go through all this again in three years? I support the hospital, and I'll support the sales tax, but we need to look further down the road."

"Currently we have come up with cuts that will add about $390,000," Magee explained. "But that will only add about $156,000 to our bottom line. We've also changed the pricing structure for our Medicare charges, added new software to help better manage physician billing in the E.R. and increased our home health census by 40, but it's still not enough."

Magee said the projected shortfall for the coming year will be $300,000 to $350,000, which is about the amount of money that the proposed sales tax would generate for a year.

"We are going to stay open, whether this sales tax issue passes or not we will stay open," Magee assured the group.

State Rep. Mike Patterson also addressed those on hand, noting that Piggott Community Hospital is not the only entity in the state suffering an economic downturn. "When I first went to Little Rock we had over a $950 million surplus. Now we're cutting budgets and we have a hiring freeze in place. Piggott Community Hospital is not alone in this."

Patterson said much of the blame rests on the federal government and how the Medicare and Medicaid programs are operated. "I can tell you that our problem is not here in Piggott, our problem is in Washington when it comes to this," he added.

After hearing from dozens of local residents, and hospital employees, the public hearing ended and the city council convened for a special called meeting.

During the gathering the aldermen held the second and third reading of the ordinance, and passed the measure without dissent. The speedy action will allow the issue to be on the ballot for the May 18 Democratic primary.