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Unpaid medical bills straining western N.D. hospitals

By   /   September 19, 2012  /   2 Comments

Before western North Dakota’s oil boom hit Watford City and surrounding McKenzie County, the local hospital’s longtime physician treated about 15 patients per month at the hospital emergency room after hours. Everyone else went to the clinic during the day.

Now, Dr. Gary Ramage said, the emergency room is used at all hours, and 466 people sought treatment there during one recent month. Ramage, who has been with McKenzie County Healthcare Systems for 18 years, now has a team of nurse practitioners, physician assistants and temporary doctors to care for the patients who come streaming in to the community’s hospital, clinic and nursing home.

(Photo by Jessie Veeder) Dr. Orlan Jackson and Dr. Gary Ramage pose for a photo outside the McKenzie County Healthcare Systems hospital in Watford City. The hospital, like many in western North Dakota, has become financially strained due to unpaid medical bills and other challenges that arose with the oil boom.

The sudden increased demand for services is straining health care facilities in Watford City and other communities in oil country. The hospital and others like it are seeking solutions such as new employees and larger buildings, but the additions won’t solve one major problem that medical facilities are facing as they adjust to a population boom: unpaid medical bills.

“The biggest problem that we’re having is people who are uninsured and under-insured,” Ramage said.

Dan Kelly, CEO of the McKenzie County Healthcare System, expects the hospital will lose more than $400,000 this year, largely due to unpaid medical bills. This year, the healthcare system’s total operating revenue is $12.18 million. Its operating expenses are $12.6 million, Kelly said.

He expects to write off about 7.4 percent of his revenue this year as bad debt from uninsured patients who cannot or do not pay their bills. That’s about $899,000 for the 2012 fiscal year.

In fiscal year 2011, the hospital had $669,000 in bad debt. In 2010, it was about $400,000, Kelly said.

In the emergency room, Ramage and other medical providers see the faces of the problem firsthand. They’re part of a new demographic of patients, people who have come from across the nation in search of work. Many are destitute, and those who have jobs send money home to support their families.

Ramage said a majority of these newcomers lack health insurance. They tend to use the emergency room, which costs more than a trip to the clinic.

“So their bills tend to be at a premium, and they’re unable to pay them anyway,” Ramage said.

Medical facilities across western North Dakota are struggling with unpaid medical bills owed by uninsured or underinsured patients, said Tim Blasl, vice president of the North Dakota Hospital Association.

The Tioga Medical Center expects to have between $400,000 and $500,000 in bad debt in 2012, said Randall Pederson, president and CEO.

“They give us false addresses, or they don’t have an address, and so when we send out our bills, the postmaster returns them,” Pederson said. “When that happens that’s basically money out the door.”

Kari Cutting, vice president of the North Dakota Petroleum Council, an association representing more than 325 companies in the oil and gas industry, said companies in the oil industry do not know where the uninsured patients are coming from.

“They provide employees with a full health care package as part of their benefits plan,” she said. “That group of employees should be using their health care coverage for those services.”

Oil-related employers have contributed financially to medical facilities. QEP Resources donated $25,000 toward the purchase of a new ambulance at Elbowoods Memorial Health Center, and Enbridge has made a variety of donations totaling more than $44,000. Marathon Oil has committed $1 million for a new hospital and medical facility at St. Joseph’s Hospital and Health Center in Dickinson.

In Watford City and Tioga, self-paying patients are now asked for payment before they provide treatment, but that is not a complete solution. A sick or injured person who goes to a hospital or clinic for emergency care cannot be turned away for lack of payment.

Raising prices for services is also not likely to be a solution. Because Medicaid, Medicare and insurers such as BlueCross BlueShield reimburse the hospital for services at rates the hospital does not determine, the medical facility cannot raise those rates. A rate increase would largely affect self-pay patients, who are more likely to avoid payment anyway.

“I think the ultimate solution to this is multifaceted,” Kelly said.

McKenzie County has purchased new software and added an employee dedicated to collecting unpaid medical bills, in addition to requiring payment for services upfront when possible. The hospital has also received grants, including $100,000 from the county, to give its finances a boost.

Kelly said his hospital can tolerate a few more years of losses before the facility will have to consider cutting services.

As hospitals and communities pursue their own solutions for the financial challenges that have come with oil prosperity, legislators and the University of North Dakota Medical School are seeking ways to ease the strain.

The medical school has added two residency positions each in Williston and Hettinger, said Joshua Wynne, vice president for Health Affairs at UND.

“The medical school has long focused on serving rural areas. Now it has stepped up its efforts,” Wynne said. “We’re not starting from ground zero, but we are trying to respond to what’s obviously been a rapidly changing situation out there.”

Meanwhile, legislators are watching closely.

“What is happening in the oil basin in regards to the severity of impacts to the healthcare delivery system is not just an increase, it is a cataclysmic increase,” said Rep. George Keiser, a Bismarck Republican who recently toured the area with several other members of the Legislature.

Keiser predicts the 2013 North Dakota legislature will consider a wide range of bills to address funding for health care systems, although he declined to name any specifics.

“What we have to determine is what proportion of funding is owned by the local community and what is owned by the state,” he said.

Keiser said a county commissioner from the western part of the state was asked recently what had been done with the increased revenue from its expanding tax base. The answer was that the county had lowered the mill levy accordingly, so there was no surplus to handle additional needs.

“That doesn’t play well in the legislature,” Keiser said. “They have to have ‘skin in the game’ as we like to say.”

-Freelance writer Christi Stonechipher contributed to this story.

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2 Comments

  1. knucklehead says:

    Your local medical facilities typically have a monopoly, and are able to set prices as high as they feel like it. Yet, somehow even when business is booming they can’t make ends meet.

    The idea that they are pricing themselves out of their own monopolized marketplace is never even considered. It always those peon customers that can’t afford to pay $200 for an aspirin, or $9,999.99 for a few X-rays and a splint that are the problem.

    When the medical field uses the well known social construct that their diagnosis should just be accepted without question, they might want to come up with something PLAUSIBLE when talking about the business end of things.

  2. [...] for payment … and then government doesn’t reimburse hospitals when the patients don’t pay? Medical resources are strained. One hospital in North Dakota has seen its bad debt more than double to $900,000 in two years after [...]

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