Hospital plans 7.5 percent rate hike

An estimated $2.2 million federal reduction in Medicare reimbursements is being blamed for a proposed 7.5 percent rate increase at Carson-Tahoe Hospital.

The federal Balanced Budget Act of 1997 reduced the amount of money the nation's hospitals receive, and three years later, the cuts are catching up with Carson-Tahoe. About 75 percent of the 7.5 percent increase is in response to the Medicare reduction.

Ron Telles, hospital chief financial officer, said Medicare patients represent about 50 percent of the hospital's business. This year, Medicare reimbursed the hospital by about $26 million this year, but during fiscal year, 2000/2001 is expected to contribute only $23.8 million.

"It's a tremendous burden to the hospital," Telles said.

According to June 1999 information from the Nevada Division of Health Care Financing and Policy, Carson-Tahoe billed an average of $2,667 per day adjusted for inpatient and outpatient activity, versus $3,972 at Washoe Medical center, $3,859 at Saint Mary's in Reno and $3,191 at Northern Nevada Medical Center, a Sparks hospital more comparable in size to Carson-Tahoe.

Telles said the increase would mean about $200 more for a stay at Carson-Tahoe. With the increase everything at the hospital will cost more, from room rates to medicines to medical procedures.

"Even with the increase, we're lower than any Reno hospital," Telles said.

Telles said the increase to most patients would be absorbed by insurance companies who have contracts with the hospital. Medicare and Medicaid pays a flat amount regardless of the charge.

The measure is being considered by the hospital's finance committee Thursday. The hospital's Board of Trustees is expected to to approve the hospital's $79 million budget April 27. Carson City supervisors will also have to approve the budget sometime in May.

The rate increase is also needed to cover the rising costs of pharmaceuticals, blood and labor, said Steve Smith, the hospital's chief executive officer.

"If you're thinking we're making money, you're wrong," Smith said. "Everybody thinks we made about $6 million last year. Well, over $2 million went to pay bonds. We also bought over $2 million worth of equipment. We're not looking to make any money this year, either. We want to make just enough to pay the bonds.

Medical supply costs are expected to increase as much as 12 percent, Telles said. The hospital's labor contract with employees orders between a 4 and 6 percent increase, which will increase budgeted salary costs from $25.5 million in 1999/2000 to $27.6 million.

"We've anticipated between a 5 and 6 percent compensation package for everyone," Telles said. "We have a shortage of technical staff, nurses. We have a shortage of everything. We want to retain the best, so we have to pay."

Trustee Pete Livermore said while he wasn't pleased with the rate increase, he supported hospital administrators efforts to balance the budget.

"It sounds like a lot of rate increase, but things like indigent care rates won't get any lower," Livermore said. "What you're doing today affects tomorrow. Nobody wants to raise rates, but sometimes, there are no alternatives left. It's my wish that we keep the hospital on the profitable side so we don't have to go to the taxpayers for support."

With the rate increase, the hospital expects to earn about $6.8 million. Profits are slated for use in a $1.5 million bond payment, $2.1 million for equipment replacement and a $2.5 million in hospital improvements.

"All monies generated go back into the hospital," Telles said.

The hospital raised rates by 5 percent in July 1999 after not raising the rates for two years. The hospital made an estimated $9.6 million in 1999/2000, up from about $6.5 million in 1998 and $8.3 million in 1997.

If you go:

What: a joint meeting of the Carson-Tahoe Hospital Board of Trustees, Building and Finance committees

When: Thursday, 5 p.m.

Where: Pinon Plaza Casino Resort Conference Center, 2171 Highway 50 East.