By Tim Sohn
Pocono Business Journal columnist Tim Sohn (Left) recently asked Michael Wilk, CFO (below Right) at Pocono Medical Center (PMC), the following questions regarding healthcare reform and its impact on the hospital and patients:
PBJ: The healthcare reform package signed into law by President Barack Obama includes a 2.3 percent excise tax on medical devices that will take effect in 2013. Do you think this will increase the cost of medical devices and affect the hospital’s bottom line?
Wilk: Yes, there will be an impact to the hospital’s bottom line since payors like Medicare and medical assistance, as well as many commercial insurers, pay based on prospectively determined rates with no direct adjustment for cost increases.
PBJ: Do you think that cost will have to be passed on to patients?
Wilk: Our charges would be adjusted accordingly; however, since many payors pay prospectively determined rates, charge increases to those payors do not result in increased reimbursement to the hospital. Self-pay patients, those who have no insurance, would be responsible for the increase in charges.
PBJ: How has the economic downturn affected the finances of Pocono Medical Center?
Wilk: The economic downturn has affected Pocono Medical Center most significantly in the area of bad debt due to increases in un-insured and under-insured patients. Under-insured patients are those who choose health plans with high deductibles and co-pays, which they ultimately can’t afford. Pocono Medical Center’s bad debt expense for the fiscal year ending June 30 is on pace to exceed the previous fiscal year by more than 25 percent.
PBJ: Have you seen any trends in terms of more or less patients over the last few years? Are fewer patients able to pay medical costs? Can you provide specific numbers comparing the last few years?
Wilk: Pocono Medical Center’s adjusted admissions, which considers both inpatient and outpatient volume, have been increasing by 2 to 3 percent over the past several years. Fewer patients are able to pay for medical costs as evidenced by the recently released data from the Pennsylvania Health Care Cost Containment Council, indicating that the value of uncompensated care, including both charity care and bad debt, grew in Pennsylvania during fiscal year 2009 by 7.9 percent, and as a percentage of net patient revenue was the highest since fiscal year 2001. Pocono Medical Center is no exception and has experienced similar increases in uncompensated care. Compounding the problem is the fact that Pocono Medical Center’s uncompensated care is almost twice the statewide average.
PBJ: Are you seeing patients wait on elective surgical procedures?
Wilk: We don’t capture data to specifically distinguish elective procedures; however, while experiencing a shift from inpatient to outpatient procedures, PMC’s total surgical procedures reflect a modest increase over the previous fiscal year.
PBJ: Have any capital projects been put on hold?
Wilk: Fortunately, PMC has not delayed or cancelled any capital projects.
PBJ: How are donations doing? Are they down or up?
Wilk: Donations for calendar year 2009 were 6 percent less than 2008. This compares favorably to national statistics, which indicate giving is down more than 20 percent. There has been no appreciable change in 2010 thus far.
PBJ: Are there any specific opportunities and challenges to operating a hospital in Monroe County and/or Pennsylvania? Is there anything unique to operating a nonprofit hospital?
Wilk: The opportunity of operating a hospital in Monroe County is related to the rate of growth in the county’s population; however, the rate of growth is beginning to level off. The challenge is to provide care to a population that has a greater percentage of un-insured and under-insured. As a nonprofit hospital, no one is denied care based on ability to pay. We are cautiously optimistic that the recently passed healthcare legislation will result in fewer uninsured patients.
Tim Sohn, a 10-year veteran journalist who specializes in writing about local business and healthcare, is a resident of Shohola, Pa., and editor of a soon-to-be launched newspaper in northern New Jersey. He can be reached at email@example.com.