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Washington County Hospital rates are up

March 21, 1997

By MARLO BARNHART

Staff Writer

The cost of hospitalization at Washington County Hospital rose by 4.2 percent in 1996, according to the hospital's vice president of finance.

Ray Grahe said the battle to hold down costs has never been easy, but has begun to get harder.

The 4.2 percent cost hike works out to an increase of $181.62 per admission, Grahe said. The average hospital stay cost $4,514.61 in 1996, compared to $4,332.99 in 1995.

Statewide, the Health Services Cost Review Commission figures for all hospitals show that Maryland hospitals' admission costs are 3 percent below the U.S. average.

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Grahe said, however, the statewide increase of 4.52 percent for 1996 was nearly double the national increase of 2.31 percent, which could mean trouble down the road.

"When this happens, the commission makes an adjustment in hospital revenues - what hospitals are allowed to make," Grahe said.

That means that the commission can be expected to cut the size of the permitted rate increase in the future.

"In December 1996, we were allowed only a 3 percent rate boost," Grahe said. In 1995, the figure was 4 percent and the year before that, it was 5 percent.

Grahe said logic dictates that in 1998, the allowance for rate increases will be 2 percent. "If that happens, we will use up about all the cushion we had built up from past years," Grahe said.

Cost-cutting and streamlining efforts have been intense since 1976, when the cost of admission to a Maryland hospital was 24 percent above the national average.

The Health Services Cost Review Commission in Maryland led the nation in the effort to improve health-care delivery while cutting costs, the commission said.

Grahe said Washington County Hospital has worked hard in recent years to decrease the number of admissions and to reduce the lengths of stays as a service to patients and as a way to keep costs down.

"It's not a bad thing to get people home quickly," Grahe said. "More needs to be done at home."

Consequently, the cost of both admissions and longer stays have risen to make up for the losses in traditional revenues, Grahe said.

Cost-cutting takes other forms, Grahe said, including the purchase of supplies as part of large group of hospitals in order to get a better deal.

"When we first started doing that more than 10 years ago, there were 250 hospitals or so in the plan," Grahe said. "Now there are 1,800 hospitals participating."

Sometimes, the supplies that are the most cost effective deviate from the traditional, Grahe said. That means doctors and surgeons sometimes must retrain to use the available equipment.

"We are traditionally a low-cost hospital here," Grahe said. "We led the state in reduction of length of stay but it gets harder every year."

Grahe said that if the hospital and a physician think it is appropriate to keep a patient hospitalized, they do, regardless of whether the hospital gets paid for that care.

"We file hundreds of cases against managed health care organizations each year, appealing their decision in these matters," Grahe said. "And we win more than half of them."

Washington County Hospital is licensed for 341 beds plus 32 bassinets in the nursery.

A look at the hospital's finances also shows:

  • Average occupancy in 1996 was 63 percent of available beds, although Grahe said the rate is about 90 percent during the cold/flu season of December-March.
  • Washington County Hospital showed a "profit" of $7,424,000 in 1996, Grahe said. Because of its nonprofit status, the hospital reinvests all of that into hospital services and equipment, both at the main site on East Antietam Street and the Robinwood Medical Center.
  • The allowance for bad debts and charity care in 1996 was $5.7 million, Grahe said. That represents 5.4 percent of the gross revenue of $106,574,900 in 1996.
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