Schneider Hospital operating at $26M deficit

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ST. THOMAS - On the heels of receiving a $10.5 million loan approved by the V.I. Senate on July 16, Schneider Hospital still is in need of increased revenue, according to its board members.

During its regular meeting at the hospital Wednesday night, the Schneider Hospital District Governing Board discussed boosting its collections efforts, introducing a bill-pay forgiveness plan and better educating its staff on administering charges from the start.

To date in Fiscal Year 2014, the hospital has taken in $46.34 million in net patient service revenue and $1.21 million in other revenue, according to a financial report from Schneider's Chief Financial Officer Fred Vitello.

The expected revenue for this fiscal year is $51.98 million.

Given the hospital's total operating expenditure's of more than $73.28 million, the hospital this fiscal year has a $25.74 million loss from operations, which is more than $6.92 million higher than the anticipated loss budgeted for this fiscal year. In Fiscal Year 2013, the loss from operations was $21.52 million.

Drop in collections

While collections were on the rise in April - totalling more than $7 million during that month alone - they have dropped in the following months.

The hospital collected a heftier amount in April because it received a $1.5 million settlement from Medicare and a $300,000 settlement from Cigna, Vitello said.

In May, collections dropped to slightly less than $4 million, according to Vitello's financial report, and in June they decreased to $3.2 million.

The board expressed concern, not only because the numbers were not what they had hoped for, but also because people were citing complaints about how the collections agency, Medical Data Systems is conducting itself.

Board Secretary Judith Richardson said she had received four calls from patients who had negative experiences dealing with the hospital's collection agents.

The board assumed the agents were representing Medical Data Systems, though they were not certain.

"They ask the people, what is the bill for? They say we can't tell you because of HIPAA," Richardson said of the interactions between the patients and the agents, who are citing the Health Insurance Portability and Accountability Act, which protects patients' private information.

In many cases, the patients then will contact the hospital's business office, Richardson said, and the office sometimes will tell them that no bill exists, which sometimes is accurate and sometimes is not, Vitello said.

To improve collections, Schneider Hospital officials are hoping that a one-time amnesty project will help to remedy the more than $14 million in outstanding payments that have accumulated during the years.

The hospital is considering giving patients 50 percent off bills that are more than a year old, a discount that would be offered for a 60- to 90-day period, according to Vitello. Medical Data Systems may help with the project.

Charging accurately

Amidst its financial struggles, the hospital is squandering revenue, at least $1 million but likely more, by undercharging patients for a number of services and items, according to Vitello.

Staff are not undercharging intentionally, but rather because they have not been educated on how to properly charge for services, he said.

"What I am trying to do is point out that this is not as bad as it actually looks," Vitello said about the hospital's income.

The hospital could be bringing in "several million" more if the employees are better educated on how to charge the patients, according to Vitello. The hospital is trying to adapt by setting up training for the departments to teach the staff the proper practices, he said.

"We have all hands on deck for this," Vitello said, noting that the insurance companies pay the hospitals based on the charges provided by staff.

Additionally, the inaccurate charges have jeopardized a charge-capture program known as Omnicell, a system that allows patients to purchase supplies on-the-spot.

"It's almost like a vending machine for patients - could be implants, sutures, screws - it charges the patient. A nurse keys it into a computer screen. It's inventory management," Vitello said.

Omnicell is a good way to capture immediate pay, but it has not been fully functioning because the hospital currently owes about $110,000 to the company, which is affecting some of the functions of Omnicell, according to Vitello.

The hospital also is missing about $5 million in charges that should have been collected via the service, he said.

"Say they take out five items at once, but it's not being charged properly," Vitello said, noting that only one item may have been properly paid for.

Tax issues

The board also discussed the hospital's recently discovered tax dues, which have threatened the renewal of the hospital's pharmaceutical license, which expires July 31, according to the financial report.

Schneider owes the IRS $570,000 in unpaid tax withholdings between 2010 and 2013.

As a result, the IRS placed a lien on the hospital's bank account to siphon off $98,000 from any incoming revenue.

The hospital worked with the IRS to release the lien and made an immediate payment of $100,000, followed by a second payment of $115,000. Schneider Hospital executives promised to pay off the remaining balance in monthly installments of $15,000.

The hospital also owes the V.I. Internal Revenue Bureau money, most of which is in penalties and interest accumulated by not filing the proper forms on time.

Vitello said that a portion owed - which he said he became aware of Wednesday - turned out to be in the form of taxes, which he told the hospital board may have been a withheld amount.

As for the penalties and interest, Vitello said the 941 VI forms, which accompany the quarterly income tax withholding payments made to the IRB, were filed late for several periods during the course of eight years. The hospital owes the local tax agency $721,000 for improper filings for fiscal years 2004 through 2012. Vitello said he is in negotiations with IRB, and he is hopeful they will waive the penalty portion of the balance.

Vitello said that he submitted a letter to the IRB on Wednesday stating that the hospital could offer a $40,000 down payment, and the IRB then could determine an appropriate monthly or quarterly payment to be made until the outstanding dues are paid off.

- Contact Jenny Kane at 714-9102 or email

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