— from Vincent Shu, MD
I would like to offer my perspective on whether the District wants to either subsidize a healthcare clinic or to operate a healthcare clinic, in terms of financial and liability risks.
1. To subsidize a healthcare clinic:
This model has been implemented at present in Orcas and proven to be a failure, which is a compelling reason for OIHCD looking to other viable models.
What did we learn from this failure?
1.1: This failure is primarily due to OIHCD not owning the clinic: “Take it or drop it” is a policy adopted by OIHCD if the clinic is not owned by the District.
“Take it or drop it” carries its own liability and financial risk which should be addressed.
For more than 16 months since the inception of OIHCD, the Commissioners have been repeatedly frustrated by UWNC’s unwillingness to disclose its financials when requested during negotiations about a subsidy. It declined to disclose its financials primarily because the UWNC clinic is not owned by OIHCD. “It is none of your business.”
UW Orcas clinic is one of 16 clinics owned by a large corporation of UW. Its financials may have been co-mingled among 16 clinics under one EIN. It may be that it is difficult to separate the financials details of Orcas from Seattle clinics for comparison.
The annual budget for medical insurance billers is $108,505, plus $153,881 for supplies and pharmaceuticals. Is OIHCD paying insurance billers who also work for UW Seattle clinics? Does OIHCD pay for supplies and pharmaceuticals that are also used by Seattle Clinics? These examples illustrate the inherent problem of co-mingled financials.
1.2: Legal Liability and Financial Risk: OIHCD is a government funding authority that is the same as NIH or MRSA. Just like any grants from NIH or MRSA, OIHCD must conduct a financial audit of the grantee to ensure the tax dollars are being used appropriately. For example, does the grant fund an expensive European vacation or a trip to the casinos in Las Vegas? This example helps to elucidate the burden placed upon OIHCD to minimize the legal and financial liability risks. If OIHCD fails to conduct appropriate oversight of OIHCD-subsidized clinics/providers, OIHCD could face legal and financial liabilities.
If the issues remain unresolved after intense negotiation, there are two options available. If “take it” prevails, without justification for a possible over-estimated budget, OIHCD could face potential legal liabilities. Theoretically, OIHCD could get sued for negligence regarding failed oversight for spending of tax dollars, whether by the islanders who pay tax and/or the Attorney General State of Washington, as stated above.
Apparently, OIHCD has considered the “drop it” option because it deemed “take it” unsustainable financially, and has begun to explore other viable options.
Affiliating with a hospital as a “provider-based” Rural Health Clinic (RHC) or partnering with an existing FQHC both result in similar problems, because the clinic is not owned by the District.
2. To own and operate a healthcare clinic:
A majority of rural hospitals have been owned and operated by a district. This is why the district is typically named a Public Hospital District to reflect its functionality. Rural hospitals have been struggling financially to survive. There were102 rural hospitals that closed between January 2010 and March 2019. It seems clear that owning and running a hospital will maximize financial risk to the District. When consultant Rousso said that “owning and running a healthcare facility will maximize control over services but also maximize financial risk to the District,” I believe what he was talking about was running a hospital with multiple clinics, not a small Orcas clinic serving about 5,000 people.
Running a hospital was not the reason for why Orcas PHD is formed. In fact, PHD was renamed as OIHCD (dba) to avoid confusion.
In my opinion, as long as OIHCD is not owning and operating a hospital, running a small clinic for about 5000 people carries a minimal financial and liability risk. If Dr. X can do it, then the District can do it, likely even better. The District, with a diversity of expertise in management, financials, IT, and legal fields is well suited to operate this small clinic far better than other professional teams that have the problem of conflict of interests.
If OIHCD owns the clinic, whose new bank account is opened by the District under a new EIN, no clinic employees are permitted to write and sign the checks. A bookkeeper and medical insurance biller are hired and report to OIHCD directly. Complete transparency begins at day one. Instead of quarterly and annual financials, OIHCD would be informed of daily profit and loss with just few clicks. By doing this, it will reduce its financial and liability risks to close to zero.
Excellent summation of the dire straits we find ourselves in.
I must ask once more – Why can’t Orcas get ahead of the breaking wave and institute a single payer system? If you’ve got an Orcas address on your ID, your’re in and sign up to pay a premium to the District, with subsidies for the poor, as now under the partial fix of Obamacare?
One clinic, one payer, no UDUB Corporate overseer. Buy the building.
My concern from the outset of the District was that the agreements entered into by the predecessor group, the Orcas Island Medical Foundation, appeared simply to pour money into the existing practices with no hard data concerning the expenses of the practices or requirements for future data. The District seems to have continued the subsidies based upon the “needs” of the practices as reported by the practices and with no specific requirements as to how the monies were to be spent beyond the vague “keeping the clinics open.” No audit is possible because that access was apparently not required by the District. And as the author points out, engaging with a complicated large entity like UW means that the actual costs would never be accurately teased out.
The notion that the District can operate a clinic itself better than a responsible physician group under a well-thought out contract verges on delusional. It has no relevant expertise. It would have to create a substantial new bureaucracy of outsiders to run the clinic at what almost certainly would be more expensive than what an agreement with a group of family practitioners and physician assistants would. Once created, it would be virtually impossible to deconstruct if it fails.
The idea that our small island could operate its own single-payer system is even more impractical, for a series of reasons that cannot even be summarized in this forum. For starters, we have fewer than 6000 residents and would be crazy to rely on risk-sharing in such a small group.
It’s time for some practical discussions.
Dr. Shu and Ms. Manning have accurately identified two key issues that the Orcas Island Health Care District (OICHD) must address. The District is responsible for assuring health care access, but lacks the ability to hold a contractor accountable for its performance. That challenge could be resolved through voluntary cooperation or by selecting a different service model to subsidize.
OICHD Commissioners are studying several models following consultation from Dingus, Zarecor & Associates. The DZA analysis is available on the OICHD website at http://orcashealth.org/wp-content/uploads/2019/10/DZA_Final-Narrative_10_06_2019.pdf
On page 13 it recommends moving to one of the federally supported models, either a Rural Health Clinic (RHC) or Community Health Center (CHC). Both those models afford many financial and operational benefits that would address the important concerns that Vincent and Peg raise. Financial and legal risk is manageable, especially under the CHC option.
I agree with Peg that having our District Commissioners operate a medical practice themselves would not be wise. In the Health Center model, a governing board hires (and fires) an Executive Director (ED), who operates the practice and hires the medical director, administrative and clinical staff.
The ED is usually not a physician, as doctor salary is best spent seeing patients. Any medical practice needs these positions no matter how it is administered. The ED produces financial and operational reports monthly or quarterly as directed by the governing board. Required audits and quality assurance/performance reviews are conducted regularly.
CHCs assure local control, accountability and responsiveness through the requirement that 51% of the governing board must be patients of the center. It is possible for health district commissioners to be members of the governing board to assure even more responsiveness of the clinic to taxpayers/voters.
Governance and operation of CHCs is explained in HRSA’s Health Center Program Compliance Manual, available at:
https://bphc.hrsa.gov/programrequirements/compliancemanual/index.html
This document is rather long, very clear and detailed, which is a good thing. It reflects 50-60 years of experience and refinement of rules that help CHCs serve their communities successfully.
One of our existing practices is already a Rural Health Clinic and could become the foundation for development into a fully funded CHC (page 14 of DZA report). The Health District already owns the facility on Deye Lane. This is the progression that the Challis Area Health Center in central Idaho took, operating first as an RHC in coordination with its Hospital District and later becoming a CHC with full federal funding and benefits.
OIHCD Commissioners are committed to ensure that island-appropriate, quality primary, acute and after-hours medical care is available to all members of our community in a financially sustainable and cost-effective manner. I commend our Commissioners for exploring ways to establish the authority and accountability required to achieve that goal over time.
Hi, Joseph, Peg and Tom: I am appreciative of your comments. It is your community as you have been paying tax to support Orcas Healthcare, you’re entitled to be aware of what it is going to happen the direction of the future healthcare which will affect each and any of you.
After spending numerous hours during the regular board meeting and special meetings with consultants, we have had huge amounts of data and information, some are confusing, some misleading, some informative which need to digest, summarize and reach relevant, helpful conclusions. Therefore, It is just about time to participate and contribute a dialogue as to “ what healthcare model fits well to Orcas culture. This is a main reason I posted this article.
Many thanks!
Peg: Your comments: ……( OIHCD) simply to pour money into the existing practices with no hard data concerning the expenses of the practices…… no specific requirements as to how the monies were to be spent beyond the vague “keeping the clinics open.”……. UW means that the actual costs would never be accurately teased out.
My comments: You have POINTED out inherent problems related to subsidizing the clinics in a form of contracting ( UW and OFHC) if the clinics are not owned by the district.
Due to the fact that OIHCD is not owning both clinics, OIHCD has NO AUTHORITY (which is referred to as “MICRO-MANGEMENT”). Both clinics can hire any medical providers they think are appropriate without approval of OIHCD. This creates a problem which what I call “ healthcare POLITICS”. The community has no way in knowing what they’re going to bring to the community.
For example, few months ago, UW wanted to bring the medical providers from Seattle clinics to cover the after hour(s) not limited to weekends, it requested the expense for accommodation and stipend. It asked an additional $250,000 for after hour(s) care. The district has no say who ( providers) will be hired even knowing that there are local medical providers available to work just because OIHCD CANNOT micro-manage UW.
As the clinics are not owned by the district, the district has no AUTHORITY to request any financials if they’re unwilling to do so for a variety of reasons.
The example to elucidate the role of the district if OIHCD is not owning the clinic: The district looks more like “ SANTA CLAUS” having gifts (tax dollars) but no power. Either “take it” or “ drop it” is what the district can do.
Peg: Thank you!
Your Comment: …….the District can operate a clinic itself better than a responsible physician group verges on DELUSINAL……. create a substantial new bureaucracy of outsiders to run the clinic…….would be more expensive than what an agreement with a group of family practitioners would.
My Response: Your view against running a clinic by the district is likely due to that you may have MISUNDERSTOOD the difference between running a clinic by the district and subsidizing ( contracting hospital based provider(s) Rural Health Clinic, existing FQHC, or Independent Physician Network Groups). Let me use a simple example to elucidate the difference.
Example: Before Dr. David Russel joined UW, he had been practicing for several years. When Dr. R. opened his clinic then, he was a boss making all the decision by himself with a total control over the clinic. He hired a clinic manager who was his wife and also medical insurance biller ( also his wife if I am not mistaken). His clinic structure then was very simple (no OUTSIDERS were required).
What the clinic structure of OIHCD owning and operating a clinic is similar to that of Dr. R ‘s private practice. There is no need to bring in OUTSIDERS creating a new bureaucracy.
OIHCD is the boss with a total control of clinic such as the hiring of provider staffs and many others. OIHCD ( boss) decides what the ideal healthcare service it wants to provide. OIHCD knows the budget well as OIHCD ( owner) can access the financials whenever it wishes to know.
A majority of rural hospitals have been owned and operated by the District. This is why the District is typically named a Public Hospital District (PHD) to reflect its functionality. We’re not asking the District to run a hospital like Island Hospital. Given the lessons OIHCD learned from UW, we’re asking OIHCD to running a small orcas clinic of about 5000 people. Are there any reasons PROHIBITIVE of OIHCD serving as a BOSS to operate this small clinic? Why do we have to contract OUTSIDERS ( such as UW) for resultant bureaucracy? If Dr. R. could do it previously, why could OIHCD do the SAME?
Thank you for your comment.
Peg:
Your comment: …….Once created, it would be virtually impossible to deconstruct if it fails.
My Response:
I think that what you’re talking is to subsidizing ( contracting ) with a large corporation such as UW, NOT a small clinic owned by OIHCD (its own BOSS)
Thank you for your comment.
Orcas Fire & Rescue Board that consists of 5 commissioners governs the duties and responsibility of Orcas EMS ( such as Chief, Medical Directors and EMS staffs).
Does Orcas Fire & Rescue Board contract and subsidize OUTSIDERS to running Orcas EMS? NO, as far as I know, Orcas Fire & Rescue Board is the BOSS.
If Orcas Fire & Rescue Board can run Orcas EMS by itself, why can OIHCD come forward to running this small clinic and doing the same just like Dr. R. did to his clinic then?
Thank you!
Information and clarity are really helpful to this productive discussion.
RHCs and CHCs may be public or private non-profit organizations. If OICHD were a successful applicant and established a public type health center, it would in fact own the medical practice. It would convene a governing board with at least 51% patients and would employ a director, providers and staff to run the operation.
The health center could benefit from several advantages including: reduced drug costs (in partnership with a pharmacy) and Federal Tort Claims Act (malpractice insurance) coverage.
I am confident that, working together, our community has the resources, intellect, talent and commitment to identify and adopt a successful, sustainable solution. Thanks!
Subsidizing a hospital practicing corporate medicineas a “provider-based” Rural Health Clinic(RHC) is not recommended
In comparison with current Medicaid RHC rate of $114 per visit, medicare cost-per-visit limit of $84.70 and FQHCs payment of approximately $170, no limit on RHC Payment for provider-based RHC with highest reimbursement payment appears to be a driving motivation to affiliating with a hospital practicing corporate medicine as per the recommendation of the consultants. This is WRONGFULLY shortsighted.
Of note, the HOSPITALS have been struggling financially to survive. The reason CMS and other insurances are willing to approve highest payment because high hospital overhead cost is being taken into consideration. ALLOCATION of overhead from Hospital OWNED clinic would have a NEGATIVE effect on the NET payment the clinic receives. As a result, the net clinic revenue may show NO significant difference from that of FQHC or free standing RHC.
As patients are responsible for 20% of copayment which is based upon the highest charge, this would increase the financial burden upon patients. This would explain that Friday Harbor patients have been charged and paid more if seen in PIMC that is CAH based clinic.
HOSPITAL OWNED clinic would promote more ER visits and hospitalizations to fill the empty beds whether it is medically necessary. They need to do more tests, procedures and operations whether are medically indicated as the expensive CT and MRI scans need to be paid off, high pay surgeons and specialists need to be subsidized to avoid those programs being closed down. As a result, medical cost is significantly increased so is the patient financial burden.
Many patients with chest pain from reflux esophagitis, gastritis/ulcer, pinched nerve, costochondritis, renal and gallbladder stones will be continually air-lifted to the HOSPITALS off island. Unnecessary air transfer WILL NOT be resolved because of the conflict of interest from the reasons stated above.
Hospital OWNED clinic may not be interested in promoting population health that is focused upon preventive health of mission driven and patient-focused practices. Why? The healthier we are, the less likely we’re getting sick to be seen in the clinic. As a result, the clinic revenue will be reduced as the numbers of face-face encounter visits decrease based upon fee-for-service (FFS) payment model.
In the end, “TAX DOLLARS” should not be used to help the HOSPITAL achieve its financial goal at the expense of Islanders’ welfare.
wow. grey matter splatter zone
lotsa’ ink being spilt here..
What some are calling a “CHC” is actually, synonymously an “FQHC” [Federally Qualified Health Center] ..in the preceding conversation here to date and in the materials on the PHD website. Also, its board will not probably be from Orcas. And one RHC we are considering affiliating with is Island Hospital. We are definitely not represented on their board. [yikes]
IMHO we have landed upon a unique asset in the management of our Orcas healthcare system: our team of commissioners. Do not let it go to waste or underestimate the effect of their advocacy for us here or in the national context today & to the horizon.
We actually have a commissioner who has been medical director at the Orcas clinic. But that is not her importance, she brings her specific expertise to a team that understands that NO assemblage of particular individual skills can outweigh the imperative in healthcare for governors that appreciate their limits and seek appropriate collaborators/resources to define and address constituent’s needs.
It goes without saying that the property of good management is to delegate appropriately. [news flash]
I believe that Dr. Vincent Shu is an amazing man.
I believe a board member of the Orcas Health Care District (OHCD)recently reportedly said that it is an “unsustainable” practice to continue to fund our two island providers, Dr. Shinstrom and the UW clinic, without having access to their financial records. Legally, neither clinic must disclose why they need the money that they ask the OHCD for, or what they have spent previous tax monies on. Thus, the board of the Health Care District is unable to check if our tax dollars are being used wisely. Yet, at the same time, the Orcas Health Care District is legally responsible, and can be sued (as Dr. Shu points out above) for allowing our tax monies to be misspent. What a catch-22. This is part of the reason that the Health Care District board is prepared to stop the funding for these two clinics, and take over ownership and management of a Orcas Island Clinic itself.
As stated in an example by Dr. Shu above, owning and operating a small clinic can be done on a small scale, similar to what Dr. Russel did before he joined the UW clinic:
“Before Dr. David Russel joined UW, he had been practicing for several years. When Dr. R. opened his clinic then, he was a boss making all the decision by himself with a total control over the clinic. He hired a clinic manager who was his wife and also medical insurance biller ( also his wife if I am not mistaken). His clinic structure then was very simple (no OUTSIDERS were required).”
Ultimately: the word is out that Orcas Island can have control over its’ own health clinic, with our money not being siphoned off into industries and pockets, but being well spent on healthcare. I say: Go For It, Board! Please do take the leap into owning and managing our own clinic!
There seems to be a bit of an echo chamber going on here.
I sense some misapprehension of how the actual financial arrangements between the PHD and the clinics work.
The disconnect that is driving the decisionmaking of the commission, seen from my seat on the audience side of the table every month, is not exactly the lack of access to the books. The OFHC has Patti between the pages all the time, and has addressed many areas of concern.
..And, though the UW characteristically behaves with corporate intransigence to use nice words, The real issue is not exactly HOW the money is being spent, though that is one aspect of it, but how operational PRIORITIES are set, as reflected by those finances. [THIS btw is what we give away if we do not own the clinic outright IMHO.]
Of course the guiding concern is how our communities health is managed. Right? It is on this single point that our entire costly healthcare system is hung up.
The wonderful thing is that on a local, rural level we can find solutions that are inaccessible on an urban/national level!
But We~The~[Orcas]People need to start asking a different kind of question.
Like: What IS “island-appropriate” care? What ARE the exact specifics of health system encounters that did not work .. or did? These kind of things are within the ability of every islander to discuss constructively.
And for those that do have some smattering of legal, financial, or medical knowledge, no matter how deep, I encourage that some consideration be paid to the impact of bald over-broad declarations on those without it. Or of a plethora of details that in the end create a barrier to understanding because they are the purview of ad hoc management decisions beyond our scope, anyhow.
Is this, in a word,
Helpful?
In the open dialogue between the commissioners that we are uniquely privy to, basic principles guiding their decisionmaking are made clear. And they are great at answering questions. We can drown this out or amplify it. Our history is a cesspool.
The choice is ours.
Leif: Many thanks for your comments.
Your comments: The disconnect that is driving the decision making of the commission,…….is not exactly the lack of access to the books. ….. corporate intransigenc …..The real issue is not exactly HOW the money is being spent but how operational PRIORITIES are set,………What IS “island-appropriate” care? the exact specifics of health system encounters that did not work.
My response: I am writing a 2nd article entitled “ How to Accomplish the Needed Healthcare Services In a Cost Effective Way” from which will address the issues you made. Stay tuned
Please note, I always submit the articles to OIHCD first for comment and consideration. From which I would decide if or not I want to publish it to Orcas Issue or Sounder for a variety of reasons.
Since we have not established what the “needed healthcare services” for island appropriate care ARE except generally, perhaps the next article will be your opinion about that. At this point the HOW is linked in a complex way to the WHAT. And that is largely undefined.
Really, how much we get per visit under different reimbursement programs is irrelevant given the other layers of complexity that affect the outcome. At present we are feeling out the receptivity of up to a dozen or more potential affiliates, and we do not even know who might bite [..or IF] and what their conditions will be for participation. THIS will determine what our choices are, and from there we must chart our course. All we know now are some druthers, and this has no effect on anything at present.
Other statements made in this comment period, like that we should find a “responsible” physician group to run our clinic fails to take into account that THIS is just one option, and one of the worst just from the perspective of simple broad accounting. No physician group can get us the $700,000/yr stipend that some forms of FQHC structure will get us. And what about a new EMR [electronic medical record keeping, a $1M item]? And we still have not considered how this would impact the mission of providing “Island Appropriate” care. And how we would enforce/implement that, given our experiences with trusting proxies with our healthcare.
Let me reiterate:
~ In the open dialogue between the commissioners that we are uniquely privy to, basic principles guiding their decisionmaking are made clear. .. We can drown this out or amplify it. ~
IMHO the jump from being a supplicant to having agency in our own health entails a different set of choices and duties for ourselves in community, and from our advocates.
Leif: Thank for your comment
Your comment: ……..we should find a “responsible” physician group to run our clinic…….
My response: Does Orcas Fire & Rescue Board subsidize an outside professional group to run Orcas EMS? No. Orcas Fire & Rescue Board is the BOSS.
Before Dr. R joined UW, did he contract “ responsible” physician group to run his clinic back then ? No. Dr. R is the BOSS.
I have been practicing medicine in the City of Sequim, San Juan and Orcas since 2010 when I came to the State of Washington. Do I hire a “responsible” physician group to run my clinic? No. The simpler, the better.
The District is formed to run a hospital , this is why the District is named as Public Hospital District (PHD). As I commented previously, subsidizing a healthcare clinic has been implemented at present in Orcas and proven to be a failure, which is a compelling reason for OIHCD looking to other viable models. We should have learned its lessons, shouldn’t we?
The District is formed to run a hospital , this is why the District is named as Public Hospital District (PHD). Are there any reasons for why OIHCD cannot do the same as that Dr. R to his then clinic and Orcas Fire & Rescue Board to Orcas EMS?
I would like to give an example to elucidate the difference between owning and subsidizing( contracting) a healthcare clinic in terms of the FINANCIAL cost.
When you’re looking for a house, there is one of two options you can do.
1. You decide to build your customized ( dream ) home fit into the way you want. So you hire an architect to design your dream home, then you hire contractors to build you home accordingly. With this, Its cost to build your dream home is $200,000. After you invest all of your energy, time, effort and money, your dream home now is being appraised by a county assessor to have a market value of 2 millions.
2. You decide to look for a home via a broker. You find a home you like with a listing price $2 millions. After an intense negotiation in a form of counter offers. Finally, the seller says “ 1.2 million(s) is the bottom line I want to sell, period!”. Either “ take it “ or “ drop it” is all you as a buyer can do at this time. If you decide to ‘’take it”, the seller would make a profit of 1 millions because the seller is a builder who has only spent a cost of $ 200,000 to build it.
#1 is an example of owning and operating a healthcare clinic with a low TRUE cost whereas #2 is an example of subsidizing ( contracting ) a healthcare clinic with a high MARKUP cost.
If you’re Bill Gates, you don’t mind paying more than you should in # 2 by using your private, personal fund. In contrast, OIHCD is using the TAX dollars coming from the pockets of the Islanders, it has legitimate reasons to use its public fund wisely to the clinic at its TRUE cost NOT HIGH MARKUP cost. To do this, owning and operating it own clinic is the ONLY way to cut the cost as the FINANCIAL SUSTAINABILITY is the center issue of concern to OIHCD.
Many thanks to all.
Two thoughts in response to Domenic. First, of course OIHD could have access to the books of any practice it subsidizes; it simply needed to require that as a condition of subsidy payments. The group that began the subsidies did not. OIHD was put in a difficult spot when it “ inherited” the subsidy arrangements.
Second, the principal problem I have with the District owning a clinic (versus finding or forming a responsible medical group to do so) is the black hole of potential exposure for property tax payers already reeling from major recent new levies and levy lifts. Over 40 years, I have seen even well-run, well-intentioned providers run into the ground by overzealous federal auditors, who often arrive to review ten years of claims and bring not just demands to recover alleged overpayments in the millions but also penalties for good measure. Another aspect of exposure is the community’s tendency to want more and more types of services on island, even those clearly unsupportable by our small population. Assisted living and skilled nursing are likely out of the question, for example, yet we are already hearing requests for them.
A very complex question and a train that is very difficult to slow down once it gets started.
Margaret: May thanks for your comments:
Subsidizing a clinic is just like buying a home from a seller. No sellers ( rare if any) will disclose their books to tell buyers the true costs of the said properties during the negotiation. The sellers may just tell the buyers “ It is none of your business by asking the books specific to the TRUE cost. It is beyond the scope of negotiation. If you like it, make an offer; if you don’t, go find another house” This would explain that the Commissioners have been repeatedly frustrated by UWNC’s unwillingness to disclose its financials when requested during negotiations about a subsidy. Co-mingling financials among the Seattle Clinics under one EIN may have posed a challenge to assess the books.
The sellers want to MARKUP its cost because it is a business. So do OIHCD subsidizing clinics. Do we want our TAX dollars to pay for high MARKUP cost or the True cost ?
The fact is matter. OIHCD has expressed its frustration over the concern of financial unsustainability which is likely due to subsidizing the clinic by paying high MARKUP cost as the clinic inherently has financial interest.
Medical billing fraud can happen in any clinics if or not it is owned or subsided by OIHCD. I think that Medical billing fraud is IRRELEVANT of this discussion.
If OIHCD subsidized clinics commit medical billing fraud as determined by the government, is OIHCD not liable for failed oversight? It may end up that OIHCD has to BAIT OUT the clinic with TAX dollars.
Recently, San Juan Island EMS under the supervision of SJI PHD #1 was demanded by Medicaid to pay back $ 350,000 for ambulance billing fraud. Was SJI PHD#1 liable ? Yes, SJI PHD#1 would have to pay the said penalty of $350,000 to Medicaid by using TAX dollars.
The issue of assisted living and skilled nursing is irrelevant of this discussion because sooner or later, it will be brought up if or not owning or subsidizing a healthcare clinic. By the way, this said issue was declined by OIHCD because the District declined to introduce any new business as primary care, after hour/urgent cares which are primary focuses of the District remain unresolved at this time.
An interesting implication of NOT having clinic ownership is that the PHD would not have control over hiring or billing which means that it would be more susceptible to fraud while still being liable for it. Further, all the many as yet unheard needs for services would be less likely to be addressed in a creative, appropriate and cost effective manner by a group that is one step removed from the discipline of accountability for both quality and cost.
Among those concerns are the need for job security by local employees, and provider trust by the community. We have a long and difficult history of frequent turnover, particularly among our trusted family practice providers, at the behest or neglect of our healthcare management proxies, because our public representatives have failed to advocate for us effectively. This has been the model all across Orcas healthcare where politically motivated decisions with a financial veneer supplant [truly] qualified professional assessments.[!] With ownership will come a measure of stability that is unknown on Orcas for a long while. And now is crunch time. Time to set an example, time to do something that works.
It was never the PHD’s mission to blindly “fund” ‘Orcas healthcare,’ but to ensure locally appropriate ~Quality~ healthcare. Even if it means booting out existing ineffectual & conflicted governance/management .. and keeping the good parts. After every disastrous and disappointing decision over the last decade we are told to suck it up, ‘it’s just business.’
Welllll….!!
Vincent and Leif–with respect to your latest comment, each:
No, subsidizing a medical practice is not at all like buying a house. The OIHD can, of course, insist on looking at all books and records. The practice can deny access and walk away. This is something that should have been done, in my opinion, when the Medical Foundation set us off on this subsidization model. Once we had the 900 lb. gorilla in place with no information guarantees, the successor OIHD was stuck between a rock and a hard place: put up with UW’s failure to provide the services expected and refusal to provide sufficient information (not that information from an entity that large and complicated would ever have made sense): OIHD could premise renewal of the subsidy agreement on transparency and delivery of the responsive and after-hours care we need, or terminate the contract, leaving the islanders who had already made it through the transition, without care in the short term. So, hopefully, lesson learned.
Nor would OIHD be liable for anything done by a physician practice in terms of billing errors or fraud and the requisite repayments and penalties under the existing subsidy model or under a more sophisticated model in which the District CONTRACTS for certain outcomes or services, like after-hours coverage. At no point is the District directing the operation of the actual medical practice and there is no liability for the practice’s problems. The San Juan situation is a serious problem precisely BECAUSE that District owns and runs the program and allowed certain employees to bill erroneously to the tune of what I understood to be at least $1 million. (The recovery reportedly was less than the fraud/error because someone at the State cut a deal.)
As for markups and profits, I assure you that, under current payment structures, the average physician practice is lucky to cover the actual costs of operation. (Look to the health insurers to see where the system is leaking billions.) To the extent that that is a concern, however, the physician practice books could be open to the OIHD. In a small group practice like what would exist here, the accounting is much more straightforward than with a behemoth such as UW.
Peg: Thank you for your comments.
Your comment: ……. The OIHD can, of course, insist on looking at all books and records. …….OIHD could premise renewal of the subsidy agreement on transparency and delivery of the responsive and after-hours care we need, or terminate the contract…..
My response: If the clinic is not owned by the District, insist on looking at all books that is easy to say than done. This may be the reason for why the Commissioners expressed the frustration over requesting disclosure of the clinic’s financials.
As we know you understand, the Commissioners have a specific responsibility to manage District assets in a prudent manner. As the TAX dollars are subsiding the clinic that is offering the needed healthcare services, the District has a legal obligation to subsiding TRUE cost not MARKUP cost. To do this, COMPLETE transparent books with VALIDATED matched balances is essential. I would give an example to elucidate what I mean.
Insurance reimbursement payments that are generated through the practice billing software are supposed to deposit to the clinic’s bank account which is booked by using Quickbook accounting software. Does the clinic revenue from the summation of Insurance reimbursement payments including co-payments/deductibles via the practice billing software is being VALIDATED and MATCHED with the bank account income generated via Quickbook? If not matched? WHY?
Are there any unexplained and unjustifiable check expenses and/or payments? For example, ? fund for an expensive European vacation.
We’re grateful that Commissioner Petty Miller is instrumental to take on this AUDIT project. She is the go-to person for the insider details specific to the barriers of such AUDIT request if any.
Due to the complexity as stated below, there has been a discussion during the board meeting by hiring third party financial auditor at expense of up to approximately $4,000 per one occasion.
If the clinic is owned by the District, aforementioned issues and problems will be resolved because that the insurance biller and book keeper are hired and reported directly to Clinic’s CEO who is also served as the superintendent of the District. As such, the way to figure out the amounts of TAX dollars is quite simple, that is, the negative balance of profit and loss through the clinic’s bank account would be the dollars amounts that are needed to be subsidized in order to bring the negative balance back to the ZERO balance.
In the end, COMPLETE transparency is easily achieved by owning the clinic, which is translated into reducing the clinic’s expenses, overhead and legal liability simply due to the fact that the District has no financial interest for their personal gain whereas the clinic not owned by the District does.