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KAH Targets Reimbursement Reform

Jason Parrott
Keokuk Area Hospital says the biggest financial hurdle it currently faces is a disperity in reimbursements for certain services.

Keokuk Area Hospital did something during its most recently completed fiscal year that it hadn't done since 2009: end the year with a positive net income.  The head of the firm charged with reversing the hospital's financial struggles during the last few years said while that is great news and shows the result of lots of hard work, there is still a big hurdle to clear.
Duane Fitch, who is President of Fitch Healthcare, said that hurdle is the disparity in reimbursement rates for smaller hospitals such as KAH.

"We are down to the most important issue remaining:  our ongoing reimbursement on Medicare and Medicaid patients.  The hospital subsidizes that patient group by about $3-million each year," said Fitch.

Fitch said KAH is considered a "tweener hospital," which he said means it's too large to be a critical access hospital and too small to be a community hospital. He said that's important because other types of hospitals are primarily reimbursed based on the cost of doing a procedure, whereas KAH is reimbursed based on the number of procedures done.

Fitch said the hospital continues to work on the issue with state and federal lawmakers, including U.S. Senator Chuck Grassley (R-IA), who recently toured the hospital. Fitch said despite that immediate need, the hospital is in the midst of the type of turnaround many have been waiting a long time to see.

Credit Jason Parrott / TSPR

"We are in compliance with all of our debt agreements," said Fitch.  "We have increased our surgery footprint, which helps us secure private insurance patients, and we have just had tremendous engagement from the community in so many different ways that have been instrumental in us moving forward in the turnaround journey."

Fitch said as a whole, the hospital has reached a point where it is adding services and giving employees raises.  That's quite a contrast to the last few years, when services were cut and employees were laid off.

Fitch said a key to that has been the $5 million loan through the state of Iowa. It's been used on information technology, equipment updates, and to pay off older debt.

"We have to be very responsible with those dollars because we are already paying them back," said Fitch.

Jason Parrott is a former reporter at Tri States Public Radio.