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LBJ CEO presents hospital’s funding dilemma to CofC

With just over 80% of the LBJ Medical Center’s annual budget dependent on federal government money, including Medicaid funding, the hospital’s Chief Executive Officer Mike Gerstenberger cautioned there is a “significant risk” to the medical center being so dependent on federal money.

Funding, expenditures,and the proposed new facility rate hikes are some of the issues Gerstenberger spoke about at yesterday’s nearly 90-minute meeting with the Chamber of Commerce held at the Tradewinds hotel.

At the outset of his presentation, which included a slide show, Gerstenberger told the audience that LBJ is “your hospital” and pointed to the hospital’s mission, approved some ten years ago by the governor and the Fono.

“Our mission is to provide patient focus, high quality, cost effective comprehensive care,” he said, and was quick to point out that “many days we come close to that, and other days we do not.”

“Please note in our mission — it doesn’t say in there that we finance health care,” the CEO said and pointed to the slide on the screen which outlines the LBJ mission. “That’s not our role in the territory.” He added that there are some hospitals in the U.S. that have insurance and do finance health care.

While the hospital’s goal is to deliver the same quality standard of care to residents like any other hospital in the country, Gerstenberger said, “the problem we have is, in 2010 we spent [an average of ] $461 per person, per year on health care in American Samoa” while in the U.S. the average spent was $7,700.

“So what we are trying to do is provide you $7,700 worth of care for $461 a year,” he explained. “And as you know, from long waits in the ER or the pharmacy... that’s a difficult job to do.”

He said this is the dilemma the hospital is facing but added that American Samoa is not the only U.S. jurisdiction struggling with healthcare costs, and it is a situation faced by other countries worldwide.

He also provided for the audience statistics on inpatients, outpatients and emergency room patients, saying, for example, that there were 26,000 inpatients in 2010 which is the average for any hospital similar to the 150-bed LBJ medical facility.

For outpatients visits, the hospital sees about 70,000 a year which is twice the average and quite a bit more than any other hospital the size of LBJ, he noted. 

There were 40,000 Emergency Department visits in 2010, again last year and it’s expected again this year which is more than other hospitals the size of LBJ, he said.

He said only 5% of the people who visit the Emergency Department are actually medical emergencies, but it’s something that people are accustomed to in the territory — going straight to the emergency department.

Gerstenberger also informed the audience that operating income for LBJ last year was $33 million, pointing out that other hospitals with a similar size to LBJ have budgets of $220 million.

He said the problem is, “we’re just not paying for health care” in American Samoa.

The LBJ CEO then touched on the issue of funding for LBJ and the “bulk of our income” at 34% comes from the federal Medicaid program. He said that last fiscal year and this fiscal year, the Affordable Care Act — sometimes called the Obama Care plan — provided an additional 14% to LBJ Medicaid money.

However, he cautioned, there are some challenges in federal court over this Obama Care plan and Republicans in the U.S. House “would like to repeal” this federal act.

“And if they do, we will immediately lose 14% of our revenues,” he said.

Another funding source for LBJ is 21% of the Interior Department subsidy; about 11% from American Samoa Government payments — but about half of that money comes from the federal government and ASG passes that on to LBJ. There is also 6% under the federal Medicare insurance program for residents over 65 years of age, he said.

“If you add up the... federal money, it’s a little over 80%. That’s very strongly reliant on one source of money and I’m sure you have read, the folks in D.C. are not really looking for more places to spend money right now,” said Gerstenberger.

He then stated that he believes that LBJ is at a “significant risk” by depending on one major funding source — the federal government.

The CEO said other major hospitals in the U.S. are less vulnerable to the decisions made by Washington when it comes to federal money because they receive much less in Medicaid.

As to expenditures, he said 52% of the budget goes to payroll, 16% to supplies, 12% to drugs and medication; and the rest to other services such as “purchase services”. He explained that the bulk of the budget for any hospital goes to payroll expenses.

Despite the huge percentage for payroll, Gerstenberger says there is a major shortage of professionals at the hospital, such as physicians and registered nurses, or RNs.

For example, he said a hospital of LBJ’s size in the U.S. would have 152 RNs, but for LBJ there is currently only 48.

In terms of registered pharmacists, a hospital of LBJ’s size should have ten of these professionals, but LBJ currently has only three, he said, adding that LBJ does not have enough employees and the current number of physicians are “overworked” and “sleep deprived” as they are also on call and cover in other clinics.

He said LBJ “just doesn’t have enough money” to pay the salaries to attract these types of professional workers for the only hospital in the territory, or enough to hire more professional personnel.

“We need to find other sources of revenue,” he said and touched on the next issue, which are the proposed fee hikes that have been deferred until the hospital holds a public hearing on June 8 to receive public comments.

For residents, he said, the law is clear on free medical care for these individuals, adding that ASG has established that it will only subsidize American Samoan residents and this is done through the ASG subsidy to the Hospital and the Medicaid match.

He also said that both residents and non-residents are eligible to apply for the LBJ sliding scale program, which will assist patients in paying their hospital bills.

Chairman of the Chamber of Commerce David Robinson told Samoa News that Gerstenberger’s “overview of the operations of the hospital, the costs involved, the staff and equipment shortages caused by a lack of funding and the issues facing the hospital management in the short and medium term in their efforts to provide a high level of healthcare for residents and non residents in the territory at affordable costs” was succinct and detailed.

Which according to Robinson, is why it was disappointing to note that “the audience was made up of private sector Chamber members and their guests, with only one of the gubernatorial candidates in attendance. Members from all the other gubernatorial teams did not attend.”

The CoC chairman noted that “Healthcare features prominently on the agenda of each of the teams and this would have been an ideal opportunity for them all to have obtained a better understanding of some of the major issues faced by the territory and their thoughts on resolving them that could be included in their respective platforms.

“I would urge all the gubernatorial teams to seek advice from and consult with the Chamber of Commerce membership about various commercial issues that will help with the preparation of their platforms in an informed way.

“An invitation has been issued individually to each of the teams to address the Chamber membership and outline their platforms prior to a Town Hall meeting with all the candidates together at the end of September. We look forward to a more inclusive dialogue with all the gubernatorial candidates and their advisors.”

Samoa News will report in upcoming issues on other items discussed and raised during the Chamber meeting.