Hospital Details Rate Increase

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Reid Hospital in Richmond has approved a 3.5 percent rate increase for 2015, which it says is its lowest increase in 17 years. Chief Executive Officer Craig Kinyon says the provider continues to face challenges including a continued increase in bad debt, charity care and Medicaid payment shortfalls.

December 30, 2014

News Release

Richmond, Ind. -- With the recent approval of the lowest rate increase in 17 years at Reid, increased emphasis on community wellness and the inclusion of the Reid health system in Affordable Care Act marketplace plans in 2015, Reid President/CEO Craig Kinyon sees reasons for optimism going into the New Year.

Reid's Governing Board recently approved a 3.5 percent annual rate increase, he said, which is equal to the national average based on the Consumer Price Index for hospital and related services. "This is great news for the community," Kinyon said. "Though we will continue to face some familiar challenges in 2015, there are encouraging signs on the horizon in the community. And we believe efforts we have taken as the leader in community health are beginning to show progress."

Kinyon noted that Reid has continued to emphasize wellness and prevention, annual check-ups and age-appropriate screenings. "We've promoted wellness for many years, and now national health care must move in that direction," he said, noting a shift in how health systems are paid from "fee for service" to "fee for value." In other words, reimbursement to providers is being tied to patient quality indicators, reduction of readmission rates, and patient experience.

He said Reid has worked for several years in anticipation of the changes and challenges of providing health care and improving community health, including:

--A focus on "continuum of care": The changes in how hospitals and health systems are paid are more directly linked to quality, value and keeping people healthy. The Reid team has established partnerships with other health care providers with specific goals of better managing the care experience among all of the entities who provide their care such as the physician office, rehab facilities, nursing homes and pharmacies. The goal is to make sure everyone is communicating and helping ensure that patients follow instructions when they get home, take their medicines properly and get to their follow-up appointments, for example. Further, for patients who have high risk health conditions, linking case managers directly to the patient and family, in their home, has been in practice as a "no-charge" service as a means of maintaining health stability and reducing the need for health care services.

--Reaching out to the uninsured: From community events like a recent session on the Affordable Care Act, to presentations to community groups, the Reid team continues to help connect the uninsured and under-insured to programs that can help them in our partnership with ClaimAid, a company that specializes in helping people sign up for health coverage programs. Kinyon said some community members do not always know there are programs to help them with medical bills or make sure they have a family doctor.

--Expanding wellness promotion: From outreach to businesses to promote employee health to low-cost and sometimes no-cost screenings, Reid is working to keep wellness at the forefront for the community. This has been a focus for Reid employees for over six years now in an enhanced wellness program that includes incentives for participants and health coaches for one-on-one support for conditions that indicate a rising-risk in the health of the employee. Reid has expanded its own wellness department, which works to improve the health of employees and offers programs and partnerships with businesses and the community.

--Growing in the region: Kinyon said the Reid system is being proactive by taking health care to the region it serves to improve patient access through such programs as telehealth, specialists seeing patients in their hometowns and investing in counties beyond its home county. “This growth is important to Reid’s future, and it is important that these communities are able to access quality care close to their homes,” he said.

--Recruiting caregivers: "In replenishing health care providers, we can continue to expand our services to improve the health of our community," Kinyon said. Reid has two full-time recruiters who are constantly seeking physicians, nurse practitioners and physician assistants. "We are competing for them with the rest of the country," he said, citing a national shortage that has communities scrambling to retain and attract providers.

--Becoming a Medicare Accountable Care Organization: Anticipated to occur in January, this will put Reid in a position to achieve improved reimbursement for care to Medicare patients and make sure they receive the right care at the right time – which will reduce health care expenditures and increase quality indicators that measure objective improvements in our services. This fits well with Reid strategies and goals in population health management.

--Community Benefit efforts: As part of its not-for-profit status, Reid continues to invest in other organizations dedicated to improving community health through Community Benefit grants. "We have expanded those efforts into the counties around us in the past year," he noted, citing a 64% increase in grant funding from 2013 to 2014 with more than $300,000 awarded.

"The bottom line in all these efforts is to build a healthier community," Kinyon said. "Being proactive about your health does decrease the cost of health care overall, but more importantly, it helps save lives and improves the quality of life for our community."

Challenges remain, he said. The continued increase in bad debt, charity care and Medicaid payment shortfalls at Reid from about $60 million in 2008 to more than $125.7 million in 2014 (excluding Medicare shortfalls) are among them. Kinyon also noted that a large percent of Reid's business is from Medicare and Medicaid patients, both of which pay at rates below the actual charges, but more importantly, pay below the cost of health care. Medicaid, for example, pays about 20% of the actual charges, resulting in write-off of $62 million in 2014. Medicare write-offs at Reid are projected to be $280.7 million in 2014. The Medicare and Medicaid shortfalls, combined with anticipated levels of charity care and bad debt, mean Reid will incur costs but not be paid for nearly $435.6 million in charges for care in 2015. These dollars billed to Medicare, Medicaid and the under-insured that are not paid, continue to result in higher costs to commercially insured patients.

Changes in health care delivery and reimbursement continue to require more focus on prevention, which is something Reid has made a priority for many years, Kinyon said.

"We are making some steps as a community towards better health, but we have a long way to go. Reid is dedicated to doing all we can to continue to lead in this area."

Rate increase history:

Reid has almost always managed to keep the annual rate increase at or below the hospital and related services Consumer Price Index (CPI). The amounts for recent years are listed below with the CPI included afterwards for reference:

1999 – 4.2% (3.5%)

2000 – 4.0% (4.5%)

2001 – 6.9% (6.9%)

2002 – 6.7% (6.7%)

2003 – 9.3% (9.3%)

2004 – 7.0% (7.0%)

2005 – 5.2% (5.2%)

2006 – 4.6% (4.6%)

2007 – 7.3% (7.3%)

2008 – 5.8% (6.8%)

2009 – 6.2% (6.6%)

2010 – 6.6% (6.6%)

2011 – 7.3% (7.3%)

2012 – 3.9% (4.9%)

2013 – 4.5% (4.7%)

2014 – 5.4% (5.4%)

2015 – 3.5% (3.5%)

Source: Reid Hospital