PMH Part One, Pocahontas Memorial Hospital’s Financial Issues
Since last fall, we have been covering Pocahontas Memorial Hospital’s interactions with the County Commission. First there was PMH’s efforts to secure a very large expansion loan to increase elective outpatient services. Then, there was both an emergency commission meeting and a special meeting to discuss financial issues PMH was experiencing because of the COVID 19 virus emergency.
Maty Beth Barr, PMH’s Chief Executive Officer, reached out to us in the spirit of transparency to inform the public about the hospital’s financial situation; its efforts to obtain financial assistance from additional lines of credit and government grants. And to explain just how prepared PMH is to handle a virus outbreak here if one should occur. In this multi-part series, Mary Beth will address these things and more.
Mary Beth, can you give us some background on the financial situation at PMH?
“Most small and rural hospitals are the sole providers for the health needs in their community” said Barr. “Because we are in small communities, we face a small volume of patients that we serve. Pocahontas County is typical of having large county square footage, but very small population. And we’ve noticed declining population here in the county as well as the patients that we serve fall in the category of Medicare and Medicaid. Being a critical access hospital, we are paid on cost-based reimbursement. So, in West Virginia, Medicaid also pays us that way. What that means is that we receive payment based on the actual cost, nothing above the cost that it takes to take care of patients, So, the majority of our funding comes from payers like Medicare and Medicaid, and we have to make up the difference with our private paid insurance companies or self-insured patients. So, it’s so difficult when you have such a small volume to make up that difference. And that’s why it’s very difficult for hospitals like Pocahontas Memorial to have a positive operating margin. Of course, that’s always our goal when we set our budgets and try to obtain a positive operating margin each year. But it has been very difficult, and it is my understanding is that the hospital has had a history of this difficulty throughout its entire lifespan here, which has been over a hundred years. And it is basically based on the fact that there is so little volume of patients that we serve and the way we’re paid.”
“We were already pretty vulnerable before this Corona virus hit” Barr continued. “We had a good year last year, in 2019, and had a huge turn around with an actual operating profit of a half a million dollars, and started out this fiscal year a little slower. And were coming out of a little bit of a hole in our finances. The first six months were very slow, but January and February -which is very typical for us because of tourism- we had two very robust months, and started out March looking for another good month, and then, lo and behold, the Corona Virus hit.”
“So, that was the main reason we went to the County Commission, upon the direction of our Board of Trustee members” Barr said. “Because we are county-owned, we wanted to be transparent and share with the County Commission that we were concerned about our financial stability over the next sixty to ninety days. We had discussed with the Board and were looking to be proactive to go out for a line of credit. At that time we were not sure what the Federal Government was going to do as a stimulus for hospitals, so we just wanted to inform the county that we may need to look to them for some financial backing, even if it was in the form of a loan that we could repay once we climbed out of this crisis. So that in a nutshell is why we had the special meeting with the County Commission.”
In the next part of this series, Barr explains the remedies the hospital have put in place which are solving these financial challenges without requiring intervention by the county commission at this time.