Health and Human Services Committee Final Report - Review of Trinity Hospital and Health Care System*

Conclusions 11

• CL1
  Contingency Planning The financial woes of the hospital are nothing new. Yet the County has not developed a contingency plan in the event of hospital closure. The County should be exploring options to provide alternative health care to citizens of Trinity County in the event of hospital closure, even temporarily. The Skilled Nursing Facility (convalescent home) associated with the hospital receives a higher rate of reimbursement from Medicare because it is physically associated with the hospital. If the hospital closes, it is unlikely that the nursing facility will remain open for two reasons. First, the services that support the nursing facility (electrical, air-conditioning, dietary kitchen, etc) are intertwined with the hospital. Second, the reimbursement rate would decrease, making the nursing facility financially unstable.
• CL2
  Retention of Long-term Options The County should not take any action that would reduce options for re-opening the hospital in the event of closure. One rural hospital was closed for a temporary period and the emergency equipment was sold, so when they managed to reopen they had to borrow equipment for sometime until they could afford to purchase it. It took over two years to get it reopened. If the hospital is closed with a debt exceeding $2,000,000, the sale of the equipment appears to be a source that the Board of Supervisors would sell off to recoup some of their losses.
• CL3
  Dissemination of Public Information The County has not effectively communicated the status of the hospital, funding options or other related health care issues, such as closure of the skilled nursing facility or clinic. Nor have they provided a forum for the public to provide input regarding their concerns about the hospital and health care or a mechanism for the public to provide assistance. Currently, the Board of Supervisors serves as the hospital's Board of Directors. Their meetings are held at 1:30 pm during the first regularly scheduled Board meeting of each month. During that meeting the Hospital Administrator provides a verbal (not written) update on the hospital status. However, many citizens are unable to attend a meeting during working hours. As a result, it is difficult for many citizens to keep up to date on the hospital status.
• CL4
  Financing of a Health Care System The overall financial situation for small rural hospitals is dire and getting worse. During the past three years, 20% of rural hospitals have closed or gone bankrupt. California has 71 rural hospitals, of which 76% lose money (source: California State Rural Health Association). A similar county-subsidized hospital, Modoc Medical Center, is in debt over $3.5 million dollars. Other rural north-state hospitals that have remained solvent have needed a supplemental, dedicated source of funding to offset losses. The Grand Jury reviewed potential sources of funding for health care. Funds received from the State, such as health re-alignment funds and tobacco settlement funds are distributed among mandated County programs. The County receives approximately $1.5 million in health re-alignment funds, which pays for the County Medical Services Program (CMSP exceeded $619,000 in 2002-2003), operation of the public health department, inmate health care, etc. $100,000 was dedicated to the hospital in the '63- 2003-2004 budget. Increased diversion of those funds to pay for the hospital's operating expenses is not feasible since the County would have to find the funds to operate other health care programs. Increase of the Transient Occupancy Tax (TOT) would provide less than 5% of the operating deficit. Impact fees, leveed on new construction, are dedicated to the school system by state law. Grants are not available to cover operating costs for the hospital. The Solid Waste Assessment ($100 per improved parcel) was approved prior to the passage of Propositions 13 and 218 and can not be diverted to the hospital. An increase in the sales tax rate is a possible option if approved by over 66% of the voters. However, the effect on local businesses would have to be evaluated. To address the funding issue, other rural north-state hospitals have established a local healthcare district or special district to provide supplemental funding. After their hospitals closed or went bankrupt, local citizens banded together to form a healthcare district and re-open their hospital. Assessments range from $100 per parcel to $150 per occupied household. The hospitals provide basic, stripped-down services, including an emergency room, a small number of acute beds, a laboratory and skilled nursing facility. One includes a rural health clinic and the others have clinics operated by private providers. Patients in need of more intensive care are referred to larger .regional hospitals. Creation of a Trinity HealthCare District is the most appropriate funding source to ensure that a basic healthcare system is available to all Trinity County residents. The California Health and Safety Code (Sections 32000 — 32508) guides the establishment of Health Care Districts. Section 32121 lists the many powers of a district, which include: 1. To establish, maintain and operate or provide assistance in the operation of one or more health facilities or health services... 2. To acquire, maintain and operate ambulances or ambulance services within and without the district. 3. To establish, maintain and operate, or provide assistance in the operation of, free clinics, diagnostic and testing centers, health education programs, wellness and prevention programs, rehabilitation, aftercare, and any other health care services provider, groups and organizations that are necessary for the maintenance of good physical and mental health in the communities served by the district. A Trinity HealthCare District would not be limited to support of Trinity Hospital. It would provide a mechanism to coordinate and fund health care throughout the County, benefiting all citizens. There are 77 healthcare districts in California, of which 59 operate or lease hospitals. Eighteen healthcare districts provide health services only, such as clinics and emergency services (source: Association of California Healthcare Districts). Depending on the wishes of Trinity County citizens, a -64- healthcare district could provide supplemental funding to Trinity Hospital, emergency and ambulance services, and clinics. In the event that Trinity Hospital closes, the district could fund clinics and ambulance services. A healthcare district is governed by a five member board, which serves without a salary. The first board is appointed by the Board of Supervisors and serve two to four year terms. As their initial terms expire, the appointed members are replaced by an elected board. The election of representatives dedicated solely to the oversight of a health care system for Trinity County would eliminate many of the concerns regarding the Board of Supervisors oversight of Trinity Hospital. The process to establish a Trinity HealthCare District is time consuming. The Local Agency Formation Committee (LAFCo) is required to review the formation of special districts. A description of the proposed district boundaries, proposed activities and budget must be submitted. The long-range plan described in Finding #1 is used to determine the proposed activities and budget, which are then used to develop a proposed assessment. LAFCo approves the format of a petition to place the formation of the healthcare district on the ballot. The petition must be signed by 12% of the registered voters within the proposed special district. Two issues are placed on the ballot: whether to create the spdcial district and whether to authorize an associated assessment (tax). The first issue requires the approval of a majority of voters, while the assessment of taxes must be approved by greater than 66% of voters. Healthcare districts have chosen different methods of leveeing assessments, ranging from taxes collected on all parcels to taxes collected only on occupied parcels. Another option is to collect taxes by property owner, so that people who own multiple parcels would only pay one assessment. Some healthcare districts have chosen to place a time limit on the assessment and the assessment must be periodically re- approved by voters. Incentives could be developed for voter approval of the assessment, such as providing a credit against hospital, clinic or ambulance bills to landowners who have paid their tax for that year. The citizens of Trinity County can determine the most equitable method of collecting taxes to fund the district.
• CL5
  Sources of Increased Revenue In addition to creation of a healthcare district, other small rural hospitals that have remained solvent have taken steps to maximize the reimbursement rates from Medicare, Medi-Cal and cash payers. In 1997 the Medicare Rural Hospital Flexibility Program established Critical Access Hospitals (CAHs) as a method to preserve access to rural health care for Medicare recipients. CAHs must meet certain eligibility requirements (including a 15 acute bed limit and potentially increased costs) in return for higher Medicare reimbursement rates. The costs of converting to CAH status must be weighed against potentially higher reimbursement and are dependent on the proportion of Medicare patients compared to other payment sources. Other north-state rural hospitals have completed studies to evaluate costs versus benefits and have elected to convert to CAH status. Trinity Hospital has not yet completed its evaluation of whether it would be beneficial to participate in the program. Reimbursement rates would be increased under the State's Medi-Cal program if the clinic qualified for designation as a rural health clinic. To qualify for such a designation, over 50% of the clinic patients must come from a "rural" area, which excludes Weaverville. Weaverville does not qualify as a "rural" area because of the ratio of patients to physicians. In April 2002, staff performed a preliminary evaluation of whether more than 50% of the clinic patients came from rural areas based on zipcode. Slightly more than half of the clinic patients listed Weaverville addresses, which presumably disqualified the clinic from rural status. The study was very rudimentary and based on older data. No recent or thorough evaluation of whether the clinic qualifies for rural health designation (and increased Medi-Cal reimbursement rates) has been conducted. A significant number of patients in Trinity County pay cash for health care services. For certain medical procedures they may receive a discount from Redding medical providers if payment is provided upon admission. Other hospitals offer discounts for bills paid within a short period of time. Trinity Hospital has been unable to offer a similar cash payment incentive because of an inadequate billing system and the requirement to offer the same early payment discounts to Medicare or Medi-Cal. For fiscal year 2002-2003, Trinity Hospital had a bad debt provision of over $844,000, a portion of which may be collected in the future. These are patients who used services at the hospital but did not pay. Some chose not to pay, but many can't afford to pay. Patients on limited incomes may qualify for programs such as Medi-Cal, CMSP or charity care, which would then reimburse the hospital for services provided. However, certain patients chose not to complete the paperwork necessary to qualify them for these programs, which decreases the hospital's revenue and places a greater financial burden on Trinity County. It is important for uninsured, limited income patients to realize that they can contribute positively to the hospital and clinic's bottom line by qualifying for financial support programs, when appropriate.
• CL6
  0 1- coolo TRINITY COUNTY -co.-
• CL7
  Long-Range Planning At one time, the Hospital Administrator and consultant were developing a five-year business plan for the hospital. This long-range plan was scheduled for completion in the first quarter of 2003, but was delayed following termination of the previous Hospital Administrator. A business plan is a basic, common-sense necessity to avoid crisis management. In addition, it would be needed if the County decides to pursue establishment of a healthcare district. The interim Hospital Administrator had tabled development of the five-year plan and instituted a short-term management strategy. Currently, there are no other efforts to develop a long-range plan for the hospital in any other format.
• CL8
  Economic Impact of Closure of the Hospital and Associated Facilities The economic impact of closure of the hospital and associated clinic and skilled nursing facility has not been quantified, but would obviously be severe. The Center for Economic Development (CED) at Chico State has performed studies to evaluate the impact of closure of hospitals. For other rural communities, closure of the hospital would result in direct impacts such as loss of 4 to 20% of the community's jobs. Indirect impacts included decreased revenue for schools (as hospital employees with families moved away) and an exodus of senior citizens who felt that accessible health care was critical. The CED study did not address decreases in property values; however, in a survey conducted by the Trinity County Board of Supervisors, over 75% of respondents thought their property values would decrease if the hospital closed. The lack of an adequate health care system is also likely to discourage new residents and businesses from relocating to Trinity County. Trinity County is obligated to provide health care to indigent residents, according to Section 17000 of the Welfare and Institutions Code. Several court cases have upheld this basic obligation, despite a County's financial constraints. In the event that the hospital and associated clinic close, the Department of Health Services will require the County to provide alternative health care for indigents, such as contracts for transporting patients to another facility. To date, the County has not quantified the cost to meet these obligations or made this information available to the public. An immediate impact of hospital closure would be the need to provide expanded emergency health care. The current resources of Trinity Life Support and the volunteer fire departments are stretched thin, almost to the breaking point. To meet public health and safety needs, the County must provide greater financial support to Trinity Life Support and emergency medical services to purchase additional equipment and supplies, increase staffing levels and subsidize overhead costs. Many residents assume that if the hospital closes, the financial burden on the County would cease. However, the hospital has long-term financial obligations, such as repayment of the debt to the County and a small, deferred liability to CALPERS. To date, the County has not made information available to the public regarding financial obligations that will remain if the hospital closes. If the hospital closes, documentation of the costs for indigent care, supplemental emergency service and long-term financial obligations must be done as part of the budget process and will not place,an additional financial burden on the County. The economic impact study can be done at minimal cost to the County (approximately $2000).
• CL9
  To establish, maintain and operate or provide assistance in the operation of one or more health facilities or health services... -73-
• CL10
  To acquire, maintain and operate ambulances or ambulance services within and without the district.
• CL11
  To establish, maintain and operate, or provide assistance in the operation of, free clinics, diagnostic and testing centers, health education programs, wellness and prevention programs, rehabilitation, aftercare, and any other health care services provider, groups and organizations that are necessary for the maintenance of good physical and mental health in the communities served by the district. A Trinity HealthCare District would not be limited to support of Trinity Hospital. It would provide a mechanism to coordinate and fund health care throughout the County, benefiting all citizens. There are 77 healthcare districts in California, of which 59 operate or lease hospitals. Eighteen healthcare districts provide health services only, such as clinics and emergency services (source: Association of California Healthcare Districts). Depending on the wishes of Trinity County citizens, a healthcare district could provide supplemental funding to Trinity Hospital, emergency and ambulance services, and clinics. In the event that Trinity Hospital, emergency and ambulance services, and clinics. In the event that Trinity Hospital closes, the district could fund clinics and ambulance services. A healthcare district is governed by a five member board, which serves without a salary. The first board is appointed by the Board of Supervisors and serve two to four year terms. As their initial terms expire, the appointed members are replaced by an elected board. The election of representatives dedicated solely to the oversight of a health care system for Trinity County would eliminate many of the concerns regarding the Board of Supervisors oversight of Trinity Hospital. The process to establish a Trinity HealthCare District is time consuming. The Local Agency Formation Committee (LAFCo) is required to review the formation of special districts. A description of the proposed district boundaries, proposed activities and budget must be submitted. The long-range plan described in Finding #1 is used to determine the proposed activities and budget, which are then used to develop a proposed assessment. LAFCo approves the format of a petition to place the formation of the healthcare district on the ballot. The petition must be signed by 12% of the registered voters within the proposed special district. Two issues are placed on the ballot: whether to create the special district and whether to authorize an associated assessment (tax). The first issue requires the approval of a majority of voters, while the assessment of taxes must be approved by greater than 66% of voters. Healthcare districts have chosen different methods of leveeing assessments, ranging from taxes collected on all parcels to taxes collected only on occupied parcels. Another option is to collect taxes by property owner, so that people who own multiple parcels would only pay one assessment. Some healthcare districts have chosen to place a time limit on the assessment and the assessment must be periodically re-approved by voters. Incentives could be developed for voter approval of the assessment, such as providing a credit against hospital, clinic or ambulance bills to landowners who have paid their tax for that year. The citizens of Trinity County can determine the most equitable method of collecting taxes to fund the district. -74- Response: I agree in part. The only possible way to fund the Hospital going forward is through a parcel assessment, but this does not require formation of a hospital district.

No Responses Found 2

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