Phasing a "swing bed" program in to carry the burden currently shouldered by the Transitional Care Center won't eliminate services according to Warren General Hospital CEO John Papalia, but phasing in property taxes might.
According to an Aug. 30 press release, a "swing bed" program is slated to replace the Care Center. According to Papalia, the program would provide the same services but would change the way the hospital administers them and allow more flexibility on how the hospital utilizes bed space. According to the release, the transition also, "addresses the gap for discharged patients who still require medical care."
The release attributes the "gap" to, "changes and reduction in Medicare reimbursement."
According to Papalia, a revocation of the hospital's tax-exempt status could change all that.
"The tax-exempt revocation has brought about the need to make significant changes to services that have been operating at a loss throughout the years," Papalia said in a statement published in the Warren Times Observer Sept. 13.
The Transitional Care Center, according to Papalia, runs at a loss of approximately $400,000 per-year.
Papalia noted, due to federal reimbursement changes at the time, the Center began operating at a loss almost immediately after opening. The hospital continued to operate the center due to the care value to that patients and families despite the loss incurred due to these reimbursement issues and reglatory requirements.
According to Papalia, he presented a plan for conversion of the Center to a "swing bed" program to the WGH Board of Directors on March 28. The presentation outlined a reduction of loss by transitioning from the Care Center to the "swing bed" program of approximately $150,000 per-year. The resulting plan allowed services offered by the Care Center to be offered at an approximately $250,000 per-year net cost to WGH.
The board recommended the transition.
On April 25, Papalia gave a presentation on national level changes to healthcare which could effect the hospital.
"We felt optimistic we could remain a viable community hospital (without eliminating services)," Papalia said.
On May 18, WGH received a letter from the Warren County Board of Appeals that changed that outlook.
"The Warren County Board of Appeals... has made a determination regarding the tax-exempt status of the referenced property," the letter said in reference to hospital property parcels listed in the letter. "While the Board recognizes that hospitals are generally exempted by statute it was determined that Warren General Hospital did not meet all of the criteria as set forth in the statute and is therefore taxable. The properties will be revalued or the 2013 tax year as taxable."
The hospital traditionally moves a budget for the upcoming fiscal year forward in May, but, according to Papalia, due to the property tax determination the budget process was deferred.
Papalia said it was, "the first time in my tenure," a budget had to be deferred.
At the June meeting of the WGH Board of Directors, Papalia presented the Board with the information that the determination had been made. He also alerted them the TCC-"swing bed" services were "embedded" in the budget for the 2012-2013 fiscal year.
The budget presented would result in an estimated $1.5 million dollar net loss over the course of the fiscal year.
"It was the first budget at a loss since I started here," Papalia said.
The hospital calculated the figure at an increased cost due to loss of tax-exempt status of approximately $719,900. The figure was based on the reduced figure to be paid at the Pine Grove Ambulatory Surgical Center
following a recent tax settlement of $3.13 per-square-foot. The original tax rate at the surgical center prior to the settlement was $4.13 per-square-foot.
The estimate of more than $700,000 represents an amount greater than the Care Center's original annual loss of approximately $400,000 and the annual loss WGH has incurred from the Crescent Park Dental Clinic of approximately $250,000.
The hospital currently pays property taxes on four other buildings; including the St. Claire building, a building on Market St., a building in Youngsville and a building in Sheffield of more than $59,000.
"The impact is, it's another reduction in the services we'll be able to offer," Doctor Charles MacKenzie, President of the Warren General Hosptial Medical Staff, said. "You can't continue to lose money on services and then get hit by a tax increase like this."
"The tax-exempt revocation has brought about the need to make significant changes to services that have been operating at a loss throughout the years," Papalia said in the Sept. 13 statement. "The Transitional Care Center, much loved in the community, and the Crescent Park Dental Clinic, much needed in the community, are the first to be affected by a need to restructure."
WGH is scheduled to appear for an appeal of the tax status change on Oct. 22.
The hospital and its board of directors have already filed an appeal, which Warren General Hospital Board President, Attorney Tim Bevevino said, "will be of a significant cost to the hospital."
"The hospital board of directors strongly feels that we clearly meet the criteria of a tax exempt organization as also supported by a letter to the editor appearing in the Times Observer on Sept. 18 by Carolyn Scanlan (President and CEO of the Hospital and Healthsystem Association of Pa,)" said Papalia.
Should the appeal be granted, Papalia said, WGH would work to retain services provided through the Transitional Care Center "swing bed" programs.
"There is nothing this organization wants more than to retain transitional care services," Papalia noted.