Hospital raises rates 6 percent

Board increases charges to keep pace with inflation

Posted: Thursday, September 05, 2002

Central Peninsula General Hospital announced last week that its charges will increase by an average 6 percent, effective this month.

"Our reasons for the increase were to keep pace with inflation, the rising costs of medical technology, rising insurance premiums and to maintain our ability to offer the highest quality care," said Diana Zirul, president of the CPGH Inc. board, the non-profit organization that manages the Kenai Peninsula Borough-owned hospital.

"In addition, recognizing that the 6 percent is higher than what our annual increases have been in the past, the board has asked our new chief financial officer to review the equity of these increases and to provide a report back to the board at the September meeting."

The decision was made at the August board meeting, but did meet some questioning from the board before approval.

"That's bigger than cost of living (adjustments)," said board member Bill Stogsdill. "It may be justifiable for health care, but I'd like numbers rather than an arbitrary statement saying, 'to meet our expenses.'"

Edward Burke, hired in July as the hospital's CFO, said the increase could have been worse, were it not for a review of billing software used by the hospital. In April, the hospital contracted Quorum Health Resources' director of health financing resources to conduct a review of the cost reporting and monthly contract allowances. The review identified errors in the billing system.

The software suggested adjustments that were either a 4 percent decrease or a 16 percent increase with the desired effect to net an overall 6 percent gain. But it was determined that invalid data was used to prepare the study, and only a partial rate increase went into effect in July. As a result, all changes were not implemented.

"We caught the glitch three days before it would've been a 4,000 percent increase," Burke said.

The board voted unanimously, to approve the increase.

Burke has been working with a team of employees to review hospital financial documents and to make recommendations to ensure that cost adjustments were made accurately and appropriately.

"No one likes to hear about rising costs," he said. "But the fact is, the cost of doing business in health care has gone up due to federal mandates to protect patient privacy and due to significant cost increases in just about all insurance premiums following Sept. 11. The hospital's health insurance premium, for example, has increased by 11 percent and we've seen our worker's compensation rates quadruple."

Burke is reviewing the hospital's budget with all department directors and working with the board's finance committee to implement the necessary changes to keep the hospital's financial performance healthy, said Loretta Flanders, the board's finance committee chair.

Zirul said the hospital continues to remain competitive, despite the increase.

"The board is never happy to raise rates," she said. "But we are pleased that we have still been able to keep our hospital charges among the lowest in the state."

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