Quincy hospital levy on November ballot

QUINCY - Voters in the Quincy Valley Medical Center district will be asked to approve or reject a $2.2 million, one-year maintenance and operations levy in the general election Nov. 4.

If the levy is approved, property owners in Hospital District No. 2 would pay $1.01 per $1,000 of assessed property value. A landowner whose property was assessed at $200,000 would pay $202 in 2015 only.

The levy requires 60 percent approval to pass.

The levy request comes after extensive discussions between hospital officials, Grant County commissioners and Grant County Treasurer Darryl Pheasant over the hospital's use of interest bearing warrants. Warrants are issued by the county and used by junior taxing districts (like hospital districts) when they don't have enough cash on hand to meet obligations. State law requires the money must be repaid with interest.

However, the outstanding balance for the Quincy hospital has increased over the past three years. At its peak in early 2014 the debt was about $4 million, said Dean Taplett, the hospital's chief financial officer. As of Monday it's about $3.6 million, said Quincy hospital CEO Mehdi Merred.

The hospital's maximum allowed warrant balance is $2.5 million, although the county commissioners have approved warrants in excess of that amount. Pheasant said he would recommend the county commissioners stop approving expenses in excess of the $2.5 million if hospital district officials didn't make an effort to reduce the outstanding balance. Pheasant recommended a cutoff as of Jan. 1, 2015, Merred said.

That would require the hospital look at all services and operations and cut costs, Merred said, from the emergency room to long-term care to management changes. The worst case scenario would be complete closure, which is a possibility, said Pat Boss, the hospital's consultant.

In 2009 the hospital's bad debt and charity care write-offs were about equal with its property tax revenues, Taplett said. In 2013 the bad debt and charity care were about $700,000 more than the property tax revenues, he said.

Merred acknowledged part of the problem contributing to lower cash flows was a paperless records system that didn't work as expected. It caused major issues in billing, especially self-pay, Merred said. "That was a disaster," he said. The resulting billing delays, misdirected payments and denied claims hurt the hospital's cash flow, Merred said.

"Generally, the ER is driving most of the bad debt," Boss said. Quincy has the major cross-state (and a major interstate) freeway running through the district, and the hospital is next door to a major concert venue. Those patients (some needing extensive and expensive treatment) usually are from out of town, and it's more difficult to collect from those patients, Boss said.

Taplett said increases in medical insurance premiums prompted patients to select plans with higher deductibles. Patients sometimes are struggling to pay those deductibles, he said, and that too impacts the hospital's bad debt.

Boss said closing the hospital and selling its assets wouldn't pay the hospital's entire debt, and hospital district patrons still would be required to pay the remaining balance.

Newton Moats, the hospital's chief purchasing officer, said hospital officials don't plan to ask for another M&O levy. The goal is to address the immediate debt issue, then start working on longer terms plans to fix the chronic issues, he said. Ultimately the hospital may have to change its service model to respond to market conditions, Merred said.