NASHVILLE, TN — With Metro Council set to vote Tuesday on a $16 million request from Metro General Hospital, emerging details raise questions about privatization.
At least one councilman sees privatization as a prospective course of action to deal with recurring financial issues at Metro General Hospital; a solution that’s been applied to the Bordeaux hospital.
“We are working to overcome our historic challenges and strengthen our hospital for the future,” Dr. Joseph Webb, chief executive officer of Nashville General Hospital at Meharry, has said.
State lawmakers’ refusal to change health care funding with more money from the federal government is another significant reason for Metro General Hospital’s financial situation, a hospital spokeswoman said.
Meanwhile, city council members report significant funding was unavailable to the safety-net hospital because bills to insurance companies were not sent in time for payment.
“They admitted they weren’t submitting insurance claims timely,” Councilman Nick Leonardo said after attending an informational session with hospital officials, held as a joint session of the council’s hospital and budget committees. “I think you have 90 days to submit insurance claims and if they don’t get submitted, then they may not get reimbursed for the services that you’ve rendered.
“The [hospital] board members who spoke [during the Jan. 30 informational meeting] attributed a large portion of the financial deficit to the fact that they weren’t doing a good job of billing insurance companies,” Leonardo said.
“They have assured us that they have taken care of that; that they were looking for a new chief financial officer and that maybe they’ve narrowed it down to three people and they have confidence that will help greatly, and they’ve talked about advertising their service little bit, and have a little more community outreach and awareness and market their services.”
“They want to target people who have insurance and provide care to them,” the Bordeaux councilman said.
Leonardo wasn’t a councilman a year ago, but he reports more experienced council members say they heard similar appeals a year ago.
Asked about his position on the request, Leonardo made a comparison to the Bordeaux hospital that’s a long term care facility for patients with critical injuries and life threatening conditions. He noted the facility was not supporting itself.
“We have put out requests for proposals [for examples of management contracts] and we found Signature Health Care and reached an agreement with them. Instead of us spending $10 million a year on the Bordeaux hospital, we are spending up to $3.5 million for each year for three years based on actual losses in an effort for Metro to try to turn this over to a private company and get out of the business of health care.”
Running hospitals is expensive, “and I’ve often thought that could be, potentially, could be an answer for Metro General. It would still be Metro General, but we’d have a private company to come in and maybe that would lower our cost and get better care, or maybe not. That is yet to be seen.”
Leonardo remains unconvinced that privatization is the answer, having noticed some government services that were privatized did not prove to provide satisfactory services. He noted garbage collection as one.
Others might include management of state prisons.
At-large Councilman John Cooper reported last week that members of the two committees sought justification for a 50 percent increase in city funding of the hospital this year.
Some $12.5 million are sought by hospital leaders for cash shortfalls plus $3.5 million for contingencies, Cooper said. The city appropriated $34 million for the hospital this year.
Cooper anticipates more hospital funding. There’s been a “lack of progress on managerial controls,” he said. “There’s going to be a new chief financial officer.” Hospital vendors have had to “wait a long time to be paid.”
General Hospital is current in paying its $4 million rent to Meharry Medical College.
The Tennessee Tribune reached out to Metro General Hospital’s communications department, posing several questions as depicted below in the question and answer format.
What is Metro General Hospital’s best reason to increase by nearly 50 percent this year’s city funding to the hospital?
“The Metropolitan Hospital Authority and Nashville General Hospital have requested additional funding – $12,500,000 along with $3,500,000 reserved – from Metro Government for Fiscal Year 2017. This need for additional funding is a result of several factors including: patient collections significantly lower than anticipated, medical expenses for patient supplies exceeded budget, the need to pay vendors for essential supplies and services, projected revenue lower than expected and labor costs higher than anticipated.
Hospital leaders are grateful for the support of Mayor Megan Barry, Metro Council, and every resident in this region for their contributions to the sustainability of Nashville General Hospital. It would not be here today without city support, leadership and vision for what a public safety-net hospital can – and should – be.
Who was the chief financial officer who left, and why? Who is the new CFO? What are the times of service and how much were/are those officials paid?
Dr. Webb is quoted as saying “Geoff Blomeley is no longer chief financial officer of Nashville General Hospital at Meharry. We are grateful for Geoff’s contributions to our hospital and wish him the best. We are working with our Board to place an interim CFO as early as next week while searching for a long-term replacement.”
What do hospital officials say about management issues discussed at the joint committee meeting?
We are certainly not where we want to be in terms of financial controls and are working hard, with the cooperation and support of Metro and our board members, to get there.
How much is the “donut hole” in state/federal help for patient insurance afflicting the hospital?
The state’s failure to pass Insure Tennessee – the Governor’s proposal for Medicaid expansion – is certainly damaging. Tennessee left some $2 billion on the table. Our tax dollars are paying for care in other states, but thousands of our neighbors need care, too.
What other reasons exist for the hospital’s financial problems; might they include patient poverty?
Metro General is certainly operating in a challenging, intensely competitive healthcare environment. Safety net hospitals are chronically underfunded. Approximately 40 percent of our patients have little to no ability to pay. We performed more than $77 million worth in charity care in fiscal year 2016 [from July 1, 2015 through June 30, 2016], nearly $80 million in FY2015 and $86 million in FY2014. Our state has refused to pass Medicaid expansion and the fate of the Affordable Care Act is more uncertain than ever.
What is the hospital’s total budget?
Its total expense budget is approximately $101 million. The metro subsidy makes up approximately 35 percent of total expenses.
An audit shows a lack of internal financial controls. What about that?
We are working with our board and Metro Finance to bring our financial systems in line with industry standards, including our Accounts Payable (AP) and Accounts Receivable (AR) time periods.
Were some vendors being paid late; some more than 120 days?
The hospital has five new board members adding relevant experience. Once councilman reports the message to council members was, “Give us a try because we’re new.” What about that?
“We welcome the leadership, insight and expertise of our five new board members,” Dr. Webb said. “Their commitment to our work and mission is unmatched, and we are grateful for their service and guidance.”
Where there enough comments from council members to indicate there are enough votes to get the additional funds?
“We appreciate the interest and support of the Mayor, Metro Council members and everyone else in attendance … and look forward to a continued dialogue throughout the week in advance of the full council’s vote next Tuesday evening,” Dr. Webb said.
The full hospital leadership team will attend the council meeting Tuesday.
Metro Council members are scheduled to consider the following resolution which can take effect with one vote of the council instead of three which would be for an ordinance.
A resolution appropriating to a certain account for the benefit of the Hospital Authority an amount not to exceed Sixteen Million Dollars ($16,000,000).
WHEREAS, by letter dated Jan. 3, 2017, a copy of which is attached hereto as Exhibit A, the Metropolitan Hospital Authority has requested additional funding from the Metropolitan Government in the amount of Sixteen Million Dollars ($16,000,000) for fiscal year 2016-2017, including a contingency amount of Three Million Five Hundred Thousand Dollars ($3,500,000); and,
WHEREAS, in order to stabilize the financial situation at Nashville General Hospital, the Metropolitan Council desires to appropriate to a certain account for the benefit of the Hospital Authority an amount not to exceed Sixteen Million Dollars ($16,000,000) from the undesignated fund balances of the General Fund of the General Services District contingent upon the satisfaction of the conditions set forth herein.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1: That the following amount from Undesignated Fund Balance of the General Fund of the General Services District is hereby appropriated:
PRIMARY EXPENDITURE ACCOUNT DESCRIPTION AMOUNT
ACCOUNT # 01101426.502613
Hospital Authority – Operating Subsidy, $16,000,000
Section 2: That the appropriation in Section 1 is funded from the following source:
REVENUE ACCOUNT # 10101.335000
ACCOUNT DESCRIPTION General Fund – Undesignated Fund Balance
AMOUNT $16,000,000 TOTAL 16,000,000
Section 3: That the appropriation set forth in Section 1 shall be subject to the following timeline and conditions for the Disbursement Requests:
1. Disbursement Requests will be made as follows:
a. An Initial Disbursement of Two Million Dollars ($2,000,000) to be funded within three business days after the adoption of this resolution,
b. Operating Disbursements not to exceed Ten Million Five Hundred Thousand Dollars ($10,500,000), and
c. Contingency Disbursements not to exceed Three Million Five Hundred Thousand Dollars ($3,500,000).
2. Each Operating and Contingency Disbursement Request will be delivered to the Metropolitan Director of Finance at least ten business days prior to requested date of funding, and additionally, be certified by the chief executive and chief financial officers of the Nashville General Hospital management as well as the board chair and finance committee chair of the Hospital Authority.
3. Each Operating and Contingency Disbursement Request will be accompanied by detailed supporting documentation and analysis to the satisfaction of the Metropolitan Director of Finance, inclusive of specific actions to bring current the undisputed working capital accounts of Nashville General Hospital including but not limited to (a) the most recent month end budget to actual cash flow and income statements; and (b) aging reports with explanations for any amounts in dispute for accounts receivable, accounts payable and any recorded or unrecorded liabilities not included in accounts payable.
4. Contingency Disbursement Requests will be made only if the Initial and Operating Disbursements have been exhausted and the Hospital Authority demonstrates to the satisfaction of the Metropolitan Director of Finance that such disbursements are for Nashville General Hospital needs that reasonably could not have been anticipated at the time of the adoption of this resolution.
5. On or before April 30, 2017, the Hospital Authority will deliver to the Metro Director of Finance an initial response and plan for corrective action to address the weaknesses in financial and other controls identified by its financial statement auditor.
6. Within 15 days of the end of each month, the Hospital Authority shall provide copies of the budget to actual cash flow and income statements to the Chairs of the Council Budget and Finance and Health, Hospitals and Social Services Committee, with an electronic copy sent to each member of those committees.
Section 4: That this Resolution shall take effect from and after its adoption, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.
Sponsored by: John Cooper, Erica Gilmore, Sharon Hurt