Oil Patch hospitals to get help in screening for bad debt risks
FARGO -- Medical centers in western North Dakota's booming Oil Patch need help in diagnosing which patients requesting nonemergency services are bad debt risks.
As part of a fund of almost $10 million to help defray hospitals' bad debts in 2013-15, lawmakers appropriated $700,000 for new information technology screening tools to curb bad debt expense by evaluating patients' creditworthiness.
Hospitals and clinics in the 17 oil- and gas-producing counties, and nearby health care hubs, have been straining under the gusher of bad debt loads.
At Mercy Medical Center in Williston, for instance, bad debts as a percentage of revenue have doubled, and continue to increase, said Matt Grimshaw, chief executive officer.
"The level of bad debt right now is unsustainable for any health provider," he said, adding that the center's clinic sometimes obtains advance payments for services, a growing practice in oil country.
A mushrooming itinerant workforce, many of them uninsured, and the demands of providing health services around the clock have combined to squeeze medical centers' bottom lines.
At the Tioga Medical Center, bad debts grew from $103,000 in 2006 to $703,000 last year and are projected to top $1 million this year, said Randy Peterson, the center's chief executive officer.
"About 10 percent of our budget is being eaten up by bad debt," he said.
Lawmakers, recognizing the burden of skyrocketing bad debt expenses, passed legislation that included $9.6 million that will be distributed in 2013-15 to critical access hospitals in oil country.
The North Dakota Department of Human Services and North Dakota Hospital Association will meet to decide how to distribute funding over the next biennium to eligible critical access hospitals, which have no more than 25 beds.
"It's a one-time shot to figure out how to keep them viable," said Jerry Jurena, president of the North Dakota Hospital Association.
Hospitals and clinics, like other businesses and nonprofits in the Oil Patch, also are struggling to attract and keep employees and to provide affordable housing to employees. The scarcity of labor and housing have combined to send wages -- and the cost of living -- soaring.
"There's just a multitude of things that are hitting them," Jurena said of the financial challenges confronting Oil Patch hospitals.
Human services and hospital association representatives will decide on criteria for assistance. They will examine factors including expenses, bad debt, patient volumes and trauma, Jurena said.
"I'm thankful for this legislation," Tioga's Peterson said. "I'm glad they recognized the need for additional dollars."
The Tioga Medical Center has 25 hospital beds and a clinic located a block away. The center plans an $8.5 million addition with an attached clinic with 16 examination rooms. It will triple its emergency department capacity, from one to three rooms, and add a new ambulance bay.
Emergency room visits have more than quadrupled in recent years, from 600 a year to more than 2,500, Peterson said.
Every medical center in the Oil Patch has a similar story to tell, he said.
Thomas Wiedell, interim chief financial officer with McKenzie County Health Systems in Watford City, said bad debt expenses have tripled in the past three years.
"It's a big number because a lot of these folks don't have insurance," he said of oil field workers and employees in related industries. "A lot of people don't even have an address."
Hospitals must provide emergency care, regardless of a patient's ability to pay. Hospitals also provide charity care.
"But if they don't qualify for charity care and it's not an emergency, we're going to require payment up front, Wiedell said.
Health providers across the country are squeezed by bad debts, but the problem is especially acute in the booming Bakken Formation area of western North Dakota, said Wiedell, who has worked throughout the country.
Because of the growing bad debt problem, vendors and consultants are devising new, sophisticated software systems to do background checks and evaluate credit risks based on demographic information, he said.
The North Dakota Hospital Association will purchase a system that will be made available to all hospitals in the state, Jurena said.
"Basically they know this is a bad debt," Wiedell said of the new financial screening systems. "This is a bad debt that just walked in."