Playing politics with rural hospitals

MARENGO — Though cuts in federal Medicaid payments to states will affect Compass Memorial Healthcare, and every other hospital in the state, Compass Chief Executive Officer Barry Goettsch isn’t worried that the hospital will close.

Revenue from entitlement programs changes with each administration, and Compass prepares for that.

“We’ve gotten used to fluctuation,” said Goettsch in an interview July 30. “We insulate ourselves from some of these swings.

“We might feel a little bit of a pinch,” said Goettsch, but he’s confident the hospital can cover Medicaid shortfalls with money from commercial insurance policies.

What concerns Goettsch is the way people play politics with rural communities. “I find it interesting that nobody cares about rural [communities] unless there’s something in it for them.”

Metro hospitals will be hit by Medicaid cuts too, said Goettsch, and they’ll have a bigger shortage to make up because they have more indigent people.

“I don’t care for the unfair scare tactics,” Goettsch said. “I can’t believe no one’s talking about the impact on metro [hospitals].”

Goettsch also took issue with a guest column by Dr. Steven Rippentrop, chairman of the Iowa County Board of Health, in The Cedar Rapids Gazette. Rippentrop implied that the reduction in Medicaid spending could push Compass “one step closer to collapse.”

That’s not true, Goettsch said. “This isn’t new … Medicaid has always been a poor payer.”

Compass lists revenue that fluctuates in a separate line item in its records, Goettsch said. The hospital doesn’t use “programs that are going away” for budgeting purposes.

The hospital treated COVID money the same way, said Goettsch. Compass didn’t report it as operational income because it wasn’t a consistent revenue stream.

“Medicaid, for us, is really not representative of our state,” said Goettsch. Only about 9% of Compass patients use Medicaid. Medicare and commercial insurance patients are about even in number, he said.

“We’re not happy about the Medicaid decisions,” Goettsch said, but Compass manages its costs so it’s not dependent on entitlement programs.

Hospitals that get complacent with cost-based reimbursement are sometimes not careful with cost management, Goettsch said. “You’ve got to manage your cost.

“I’m all for identifying fraud,” said Goettsch, but he doesn’t believe politicians put enough thought into the Medicaid cuts. They should make proper reductions rather than making cuts for the sake of making cuts, he said.

“Hospitals are going to take the hit on this,” said Goettsch. For-profit clinics can refuse to take Medicaid patients because of the reduced payments, but hospitals will treat anyone regardless of ability to pay, he said.

Everyone should be concerned, said Goettsch, not just people who might lose Medicaid coverage. Hospitals that are dependent on Medicaid, “they’re going to have to shore that up somehow,” said Goettsch. That could mean cutting services or staff.

Compass, however, has found a way “to avoid slings and arrows and focus on the future,” Goettsch said. “I’m proud of my people. They’ve worked hard.”

Wendy Jordan, Compass chief financial officer, said Medicare rates are based on cost from the previous year, but the program will even up the account at the end of the year, either paying the hospital additional money or requiring that the hospital pay back some funds.

Medicare Advantage doesn’t do that, nor does Medicaid, said Jordan.

Because some exclusions apply, the actual Medicare reimbursement rate is only about 41 cents on the dollar. Medicaid pays less — about 37 cents on the dollar, said Jordan.

“We have worked really hard since the MCOs took over … to build our patient population and our services so we’re not dependent on these … payers,” said Jordan.

Managed Care Organization are health care companies or health plans that were meant to control health care costs while maintaining or improving the quality of care for their members by managing and coordinating health care services, often through limited provider networks and pre-authorization requirements.

Medicaid management companies have actually hurt hospitals, said Goettsch, because they are for-profit organizations and deny claims to avoid paying out. Profit margin is the key, he said.

Meanwhile, construction is winding down on the hospital’s new emergency wing. An open house is scheduled for September.