Floyd County Medical Center seeks organizational change; would be able to levy taxes

By Bob Steenson, bsteenson@charlescitypress.com

Floyd County Medical Center is one of only two county hospitals in the state to not receive tax support. Come November, if supporters get their way, that distinction will end.

Voters will be asked in the Nov. 5 general election to approve changing the way the medical center is organized under state code. That would make a number of changes, including having the hospital managed by a board of trustees that is elected rather than appointed.

But the biggest difference, and the reason for seeking the change, is that it would give that new hospital board the authority to levy county property taxes to support the hospital.

An annual levy of $500,000 is being considered if the change is approved.

Hospital officials have been talking about the medical center’s financial challenges for almost two years.

They made their case early last year when they asked the Floyd County Board of Supervisors for $100,000 in support. They didn’t receive it.

They made the case again last September when they explained why the hospital could no longer afford to run the city Meals on Wheels program, a few months later handing off that program to Apple Valley Assisted Living.

And they made their case to the Board of Supervisors again this year when they requested $500,000 in support. This time they received $250,000.

“The last thing the board wanted to do was to go forward and ask for assistance,” said Rod Nordeng, the hospital administrator. “It wasn’t an easy decision.”

For years the hospital administration had prided itself on the fact that it was able to run without taxpayer subsidy. But changes to the state’s Medicaid management system changed all that, Nordeng said.

When the state changed management of the program that provides health care to low income Iowa residents from a state-run program to one run by private insurance companies, the payments to the Floyd County Medical Center and other hospitals took a dramatic turn downward, Nordeng said.

In fiscal year 2017, the hospital submitted $6.86 million in Medicaid charges, and was reimbursed $2.98 million, or about 43%.

In fiscal year 2018, the hospital submitted $6.75 million in Medicaid charges but was only reimbursed $2.12 million, or about 31%.

That represented an $857,000 reduction in revenue from Medicaid.

“It wiped out our bottom line,” Nordeng said. “We’re running at a deficit.”

In addition, Wellmark Blue Cross/Blue Shield, the predominant private insurer in the state, has also begun reducing the amount it allows for services, he said.

The hospital’s contract with Wellmark sets the amount the hospital will be reimbursed for providing services to Wellmark customers. Over five fiscal years, from 2015 to 2019, Wellmark has continually reduced the amount of the charges it covers, from reducing the average charges by 39% in 2015, to reducing them by more than 51% in 2019.

“On certain procedures, Wellmark pays less than Medicare,” Nordeng said.

A hospital the size of the Floyd County Medical Center has no choice but to sign the Wellmark contract, Nordeng said. Some larger hospitals have filed lawsuits over changes in reimbursement rules.

“I still stand by what the insurance companies have been allowed to do is criminal. We’ll see what happens in the courts on that,” he said.

Almost all of the other county hospitals in the state — 40 of them — have been receiving county property tax support for decades, Nordeng said.

In the 2018 fiscal year, according to public information, the average Iowa county hospital property tax levy was $1.4 million. The average of hospitals in counties about Floyd County’s size was $1.6 million.

“We’re asking only about a third of the average,” Nordeng said, referring to the $500,000 levy that would be suggested in Floyd County.

Floyd County Medical Center will ask voters in the Nov. 5 election to approve changing the medical center from being organized and governed under Chapter 37 of the Iowa Code, as it is now, to be established and governed under Chapter 347.

It needs to turn in a minimum of 318 valid signatures to the County Auditor’s Office by Sept. 5 to be included on the November ballot. That number is based on a percentage of voters in a previous election.

Nordeng said that at the beginning this week they already had 300 signatures, but were planning on turning in at least 400 to make sure they have enough valid signatures.

People who can sign the petition are residents of Floyd County who are eligible to vote. They do not have to be registered to vote.

If voters pass the referendum on Nov. 5, the Floyd County Board of Supervisors would appoint either five or seven trustees to be the first members of the new hospital board. After that all the members of the board would be elected at the next general election for staggered terms.

Trustees must be Floyd County residents and cannot be employees of the hospital or have staff privileges at the hospital, or be spouses of people who do. Trustees are not paid, but can have expenses reimbursed.

“We certainly wish we were not having to go forward with this or even to have to ask the supervisors the last two years. That’s important,” Nordeng said. “But, for significant revenue changes out of our control, we’re still expected to provide the same level of service, and the payers have reduced their reimbursements.”

He said a task force of supporters that has been formed to promote the referendum wants to be careful how it phrases the campaign.

“It’s not, ‘Save our hospital,’” he said. “We’re definitely not closing. It becomes a question of what services we provide.”

Ron James, the chairman of the current hospital board, noted that other hospitals have gone to physicians assistants staffing their emergency rooms, while the Floyd County Medical Center ER continues to be staffed by physicians. Many hospitals have eliminated obstetrics departments or cut other services.

Nordeng said, “We’re still able to maintain a very vibrant medical center, and that’s pretty unique. Excellent equipment, excellent physicians, excellent surgeon, excellent staff. And we’re so vital for the community and the county itself.

“For us, this was a difficult decision to make. It’s critical for health care in our county, and we’re so optimistic about the continued future,” he said.

“I’m very optimistic. It’s very affordable,” he said, referring to the amount of property tax levy being suggested.
Figures supplied by Nordeng in an information handout show the additional property taxes for a residence with an assessed valuation of $50,000 would be about $16; about $49 for a $150,000 home. A business with an assessed value of $500,000 would pay about $214 a year more, and agricultural property would pay about 47 cents per acre.

“We’re just asking for a little bit of help to make up for the reductions between the insurers and the feds and mostly the state,” Nordeng said.

“We’re just asking for the dollars to make sure that we can continue to be operational, that we can maintain the appropriate facility, retain good staff,” he said. “We will continue to be good servants of the resources that we have.”