Rural hospital reaches tipping point

The emergency room at Lake Region Healthcare in Fergus Falls is a busier place than it was just a few months ago.

In fact, CEO Larry Schulz says they might be forced to add more staff, despite a hiring freeze at the hospital. "But that's a difficult financial decision to make because it increases everybody's health care cost," Schulz said.

The challenge is that more of the people coming to the emergency room don't have health insurance. So the cost of their care is partially shifted to those with insurance.

The hospital is also writing off more charity care and bad debt.

Lake Region Hospital is the largest employer in Fergus Falls. Schulz says while the hospital is in relatively good financial shape, he worries about state budget cuts putting more strain on hospital finances.

"It's kind of like a clock ticking. If MinnesotaCare should be stopped, then I don't know what I will do."

Schulz's greatest concern is Gov. Tim Pawlenty's proposed reduction in Medicaid reimbursement.

The state already reimburses for care based on 2002 health care costs. The proposed reduction means over the next two years, the hospital would lose $891,000 the state now pays for Medicaid patient care.

"What that doesn't include is the fact that for every dollar the state of Minnesota pays us for medical assistance, the federal government matches that," said Schulz. "So we lose $891,000 from the state, but we also lose an additional $891,000 in reimbursement that's matched by the federal government."

That's nearly $2 million that would need to be shifted to patients with insurance. Schulz calls it a hidden tax on local residents.

Gov. Pawlenty also wants to cut the cost of the state-funded insurance plan, MinnesotaCare. One proposal is to stop providing coverage for single adults.

Single adults like Jean Dorman. The petite, fashionably dressed 59-year-old was a loan officer until a few months ago.

She couldn't afford health insurance premiums and she hadn't been to the doctor in years. Last fall she got sick and needed gall bladder surgery.

She applied for MinnesotaCare, but had to stop working to qualify.

"I had to take a leave of absence from my work," explained Dorman. "So, this really put everything into a tailspin for myself physically and financially."

Dorman says she delayed her surgery for nearly two months while she waited to qualify for MinnesotaCare.

Now she's having more health problems. She's been to several doctors and is waiting for a diagnosis, but wonders if the state will drop her from MinnesotaCare before she finds out what's making her sick. Not knowing causes her more than a few anxious moments.

"Not knowing first of all what I'm dealing with, not knowing how long it's going to take to get to it, if we can find what it is. And at the top of the list is not knowing if the insurance is still going to be there," said Dorman. "It's kind of like a clock ticking. If MinnesotaCare should be stopped, then I don't know what I will do. I won't have the option to continue on."

That same uncertainty affects nearly 600 single adults enrolled in MinnesotaCare in Otter Tail County. About 8,000 county residents now receive some type of government medical assistance.

More adults are trying to enroll in MinnesotaCare at a time when there are cuts being contemplated, according to Otter Tail County Human Services Director John Dinsmore.

He says in the past five months, applications for medical coverage in Otter Tail County are up more than 30 percent, as people lose jobs and insurance coverage. But he says only 3 percent of those people met the financial guidelines to qualify.

"People do wring their hands and say, 'How poor do I have to be? How destitute do I have to be to qualify for your programs?' The reality is you really have to get to a point where you're, as they say, hitting the bottom of the barrel before you are eligible for our programs," said Dinsmore.

People who don't qualify for state medical assistance are often the very people who add to the hospital emergency room workload.

At many rural hospitals, state budget cuts mean more uncompensated care and more bad debts.

Dinsmore says the increasing financial pressure on the hospitals creates a tension that comes back around to local government.

"Those local providers will say, 'Then what local unit of government is going to step up and help take care of that?'" said Dinsmore. "We've had discussions where they say, 'Ottertail County, how about if you do that? If we're going to have more uncompensated care at the emergency room, let's enter into a contract so you cover the difference.'"

But that's unlikely to happen with the county government also facing a tight budget.

The more likely solution will be higher medical bills for those who have health insurance, as the hospital tries to spread its costs among a shrinking pool of paying customers and growing losses for the hospital.

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