Hospital moves to monetize the debt it is owed...could be as much as $6 million
Author: Beaufort Observer Editorial Team | Published: December 22nd, 2010
Publisher's Note: We do very much appreciate this fine article on the BRHS debacle from our friends of the Beaufort Observer.
The Beaufort County Health System Board of Commissioners met in special called meeting Thursday (12-16-10) to hear a recommendation from its Finance Committee. Essentially the recommendation and eventual action was to seek to monetize the accounts receivables now outstanding. The objective is to contract with outside organizations to collect those outstanding obligations owed the Hospital and to monetize those assets in the form of a loan from the collection companies with the loan(s) collateralized by the receivables.
Two types of receivables were considered: those owed by insurance companies or other third parties, and those owed by individuals ("self-pay"). The focus is on the estimated $5-6 million owed by third parties. The thinking is that as much as $2.2 million of that can be loaned by companies that will bid on collecting them for a fee with the loan and fee being paid by the collections. Another company would establish a financing plan whereby patients who owe the Hospital money could negotiate re-payment schedules if they wished to do so and the company would advance a portion of those collectibles to the Hospital. Yet another company would be contracted to collect old accounts that the debtor does not choose to put in a payment plan.
As you will hear in the video, the plan is to use the $2.2 million loan to meet the Hospital's $1.2 million debt services payment due January 31 and the remainder to underwrite future payroll obligations and pay vendors who are owed old accounts payable. The third "leg of the stool" the CFO refers to is a more efficient coding and billing system for Medicare/Medicaid which has already been contracted.
The action was to authorize the staff to negotiate the details of these contracts to be presented to the full board for approval at a future date. Given that the debt service payment is due at the end of January, there is not much time to affect the plan.
Here is the first part of the meeting in which Richard Rief explains the proposals.
The second video is simply a continuation of the discussion and ultimately to vote, which approved the recommendation.
Opinion Commentary
The complexity of this discussion risks overshadowing the significance of the action. We would suggest that in this situation one can see what the problem with the Hospital really is. They simply have not been very effective in collecting what is owed them, even from insurance companies. Six million dollars is a lot of money to be owed. And that is just what the review indicates is collectable. It does not include what has already been written off that possibly could have been collected. If you run the numbers, those accounts receivables exceed the operating losses that have produced the crisis the Hospital faces. And that does not include the losses from not coding and billing correctly.
To put it another, yet simpler way, in our opinion if somebody had been doing their job the Hospital would not be in the mess it now finds itself.
We think the time has come for somebody to explain how this could have been allowed to happen. We think that "somebody" should be the former management, but we don't expect that to be forthcoming. And poor management is not the problem. It is the symptom. The problem, it seems to us can be equally simply stated: In our opinion it is lack of proper oversight. And on that point we believe some current and former board members have a lot of explaining to do.
This article provided courtesy of our sister site: Beaufort County Now
The Beaufort County Health System Board of Commissioners met in special called meeting Thursday (12-16-10) to hear a recommendation from its Finance Committee. Essentially the recommendation and eventual action was to seek to monetize the accounts receivables now outstanding. The objective is to contract with outside organizations to collect those outstanding obligations owed the Hospital and to monetize those assets in the form of a loan from the collection companies with the loan(s) collateralized by the receivables.
Two types of receivables were considered: those owed by insurance companies or other third parties, and those owed by individuals ("self-pay"). The focus is on the estimated $5-6 million owed by third parties. The thinking is that as much as $2.2 million of that can be loaned by companies that will bid on collecting them for a fee with the loan and fee being paid by the collections. Another company would establish a financing plan whereby patients who owe the Hospital money could negotiate re-payment schedules if they wished to do so and the company would advance a portion of those collectibles to the Hospital. Yet another company would be contracted to collect old accounts that the debtor does not choose to put in a payment plan.
As you will hear in the video, the plan is to use the $2.2 million loan to meet the Hospital's $1.2 million debt services payment due January 31 and the remainder to underwrite future payroll obligations and pay vendors who are owed old accounts payable. The third "leg of the stool" the CFO refers to is a more efficient coding and billing system for Medicare/Medicaid which has already been contracted.
The action was to authorize the staff to negotiate the details of these contracts to be presented to the full board for approval at a future date. Given that the debt service payment is due at the end of January, there is not much time to affect the plan.
Here is the first part of the meeting in which Richard Rief explains the proposals.
The second video is simply a continuation of the discussion and ultimately to vote, which approved the recommendation.
Opinion Commentary
The complexity of this discussion risks overshadowing the significance of the action. We would suggest that in this situation one can see what the problem with the Hospital really is. They simply have not been very effective in collecting what is owed them, even from insurance companies. Six million dollars is a lot of money to be owed. And that is just what the review indicates is collectable. It does not include what has already been written off that possibly could have been collected. If you run the numbers, those accounts receivables exceed the operating losses that have produced the crisis the Hospital faces. And that does not include the losses from not coding and billing correctly.
To put it another, yet simpler way, in our opinion if somebody had been doing their job the Hospital would not be in the mess it now finds itself.
We think the time has come for somebody to explain how this could have been allowed to happen. We think that "somebody" should be the former management, but we don't expect that to be forthcoming. And poor management is not the problem. It is the symptom. The problem, it seems to us can be equally simply stated: In our opinion it is lack of proper oversight. And on that point we believe some current and former board members have a lot of explaining to do.
This article provided courtesy of our sister site: Beaufort County Now
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