LBJ CEO: There was no problem implementing higher fees

Rep. Sanitoa calls for independent LBJ rate study

While LBJ Medical Center officials say the implementation of the new fees hikes went into effect last month without any problems, Rep. Larry Sanitoa has called for an independent, comprehensive review and rate study, taking into account the high cost of living, the high number of low income families and the delay in the minimum wage increase.

The new fee increases greatly affecting outpatient services at LBJ went into effect July 2, and were among the issues raised during Monday’s House Health/LBJ Hospital Committee hearing where hospital officials were called to testify.

Rep. Larry Sanitoa asked hospital officials if they had encountered any problems when the fees were implemented, especially at a time when there were concerns from the public over the increase. He also wanted some data on the volume of patients at the hospital — has it decreased or increased? — since the fees were implemented; and asked about the status of the “sliding scale” program, which assists low income families.

“It’s been a very smooth implementation,” was the reply from LBJ chief executive officer Mike Gerstenberger, who explained that it’s “very early to know” any major changes in patient volume and revenue.

However, the LBJ CEO did point out that July numbers have come in and “it looks like the inpatient volume actually went up this July”, compared to the previous July, at about 7%, with an increase of 5% on the average of all Julys in the last five years.

“So that’s good news. That suggests to us that the really sick people, who absolutely need care, are still getting it. Also it should not be a surprise, because most of our adjustments are not in the inpatient side of the fees,” he explained.

For the outpatient side of the business, “it looks like it was down about 13% this July versus the previous July,” Gerstenberger said. “July tends to be — seasonably — a slower month for us.”

So with one month as a data point, “it’s pretty hard to tell whether that was a normal seasonal decrease, or whether that was the result of the fee hikes. With the volume down and the rates up, the actual cash collected this July was about 25% higher than collected in July last year,” he said and reiterated that a more thorough review of the numbers needs to be carried out.

As for the “sliding scale” program, he said, “we continue to enroll people... and we have now approved” about 4,000 families and some of them have “a very small discount and some ...have had their entire bill written off” under particular circumstances.

Sanitoa told the LBJ officials, which included chief financial officer Viola Babcock and hospital board chairman Moananu Va, he did not believe the hospital had conducted an independent study on how much money the hospital actually needs to operate annually.

“What I would really like to see Mike, is at some point, maybe have an independent consultant seriously look at the rate structure,” said the House rep, who noted that a rate structure should take into consideration factors such as the percentage of low income families in the territory. He then asked how often the board requires the hospital management to review fees.

“Is it once a year, or when the hospital needs to find money?” Sanitoa asked.

Gerstenberger replied that in the last two years, it’s been during board discussions of the annual budget that the fee issue has been raised.

“In our opinion, we really need to do a comprehensive look... at a territorial health plan,” he said, and a component in that comprehensive plan would be the hospital’s strategic plan, which includes a strategic financial plan — “to say, ’here is what the community has decided they want and here is the level of care that we are striving to deliver and how we are going to pay for it.’”

Sanitoa suggested to the LBJ witnesses they conduct an “independent [rate] study”, taking into consideration, the high cost of living, current minimum wage delay and even consider in such a study the issue of “non-residents” who are also paying taxes but at the same time are now paying a much higher facility fee, under the new fee structure.

“We need to find common ground and a balanced way of looking at these fees saying that ‘it’s the best thing that we can come up with.’

“We should seriously look at a study to justify how much we really need to run LBJ,” he said.


Responding to questions from Rep. Tapumanaia Galu Satele Jr. on the government subsidy, Gerstenberger said LBJ received last week the August subsidy of $354,000. However, he noted, the government subsidies for June and July were short $50,000 for each month.


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