The Eureka Springs Hospital Commission held two back-to-back special meetings August 27, commencing with Chair Dr. John House discussing approval of the 13-month cost report for the period of January 1, 2019 to January 31, 2020, and the second meeting by holding an executive session to discuss hiring and/or termination of hospital staff.
Beginning with the cost report, not provided to the press, Darrell Parke of Alliance Management Group said, “It’s the last Allegiance cost report that was given to us.”
Parke said the cost report is a complete financial and manpower look at the hospital, where all services and expenses are categorized into a dollar amount. After commissioners approve the cost report, Parke said, it is sent to Medicare and Medicaid where it is audited for approval, a process that can take 60 days.
Parke cautioned commissioners that the estimation could change, but currently indicates that the hospital is due to receive a total of $1,000,000 in reimbursable revenue from a combination of Medicaid and Medicare for the 13-month period of services.
“In addition, which is I think more exciting, is that if it’s approved then both our Medicaid rate and our Medicare rate will increase,” Parke said, indicating that the revenue reimbursement return would likely increase from 35 to 65 percent. “That drives more revenue to the hospital. And we suspect that the 2020 interim cost report, which will be from February first through July, will also be beneficial to the hospital.”
Those numbers not yet determined, Parke turned discussion back to the previous 13-month cost report stating it was due to be approved and signed by the commission no later than the following week, and will be provided to Allegiance, the previous management company.
Parke said the cost report indicates Allegiance was paid an estimated $430,000 in management fees during that period, or six percent of the reported $7 million in Net Patient Revenue. Commissioner Tyson Burden commented that the management fee percentage compared to NPR paid to Allegiance was well above the recommended two percent by Becker’s Hospital Review.
The present contract pays Alliance 7.5 percent of net revenue, stating it is equal to the greater of $25,000 or 7.5 percent provided that the fee will not exceed $50,000 for any month.
Burden said the commission is ultimately responsible for the cost report, and was not willing to approve it since he was just provided the complete report the same day.
In addition to his recommendation of deferring the approval until after full analysis Burden was concerned with the accompanying letter of the cost report.
Parke said that, by Alliance’s direction, Certified Public Accountant Bill Couch prepared a summarizing letter to the commission and it would not be part of the cost report.
Regardless, Burden scrutinized the letter that said hospital revenue was affected by the Covid-19 pandemic during the 13-month period, but Burden pointed out the pandemic did not occur until after January 31, 2020, which is outside the window of the cost report.
“So, that was concerning,” Burden, who asked for the letter to be revised to reflect an accurate timeline of events, said.
Parke welcomed Burden to phone Couch with his concerns. When the press asked for the cost report, Parke said he would provide it after the commission approves it.