OCH Regional Medical Center Chief Executive Officer Richard Hilton said a report calling upon the county to seek transaction proposals for the publicly-owned health care operation was led to its conclusion because of cherry-picked data misrepresenting the hospital’s true financial standing.
Hilton gave a 10-minute public presentation Tuesday in the chancery courthouse refuting many of the claims made by the Tennessee-based firm Stroudwater and Associates and argued OCH administrators, like all hospital leaders across the nation, will make the necessary adjustments to adapt to the ever-changing health care landscape.
First presented in October, Stroudwater’s report stated OCH generates adequate cash flow to stay in operation and service its existing debt load on a stand-alone basis, but an annual gap of $3 million to $4 million exists between current operating results and needed levels of performance before strategic capital investments are considered.
Hilton, however, refuted that claim, saying Stroudwater’s data does not follow generally accepted accounting principles (GAAP) used by OCH’s own local auditor, and the out-of-state consultants “understated our income and overstated our expenses … which affected our operating margin percentage.”
“We have plenty of cash to operate on. We can make decisions going forward, whether we need to tighten up or reduce expenses. That’s within the (OCH Board of Trustees’) leadership and discretion,” Hilton said.
Stroudwater representatives backed their own findings, saying OCH’s short-term trend of expenses growing faster than revenues must be dealt with to guarantee the hospital’s long-term viability through investments.
“If that were to continue in perpetuity, then the organization would eventually become insolvent. To Hilton’s credit and his team, we would expect them to make changes,” said consultant Jeffrey Sommer.
Hilton agreed with some of the points Stroudwater raised in its report, specifically with numbers showing a decline in inpatient numbers and revenues. That decline, he said, is a national trend and not specific to OCH.
OCH experienced a 19.2 percent decline in inpatient admissions from Fiscal Year 2011 to FY 2015, hospital data shows. Outpatient observation admissions in that same timeframe, however, grew 181.2 percent, while emergency room outpatient observation admissions posted a 164.1 percent growth in the five years.
Suggestions that a company can purchase OCH and provide more services to plug outmigration rates are easier said than done, Hilton said, because of state rules dictating services. Oktibbeha County’s population cannot support “super specialties,” including areas of expertise like neurosurgery and cardiology, he said, and the state is unlikely to grant certificates of need when the demand is simply not there.
Data provided in Hilton’s proposal stated almost 60 percent of Oktibbeha County residents seeking inpatient care at a facility other than OCH did so to access specialty care that can only be supported by larger cities.
“There’s nothing we can do about that until our population base is sufficient enough to allow those specialties to come here and have a sustainable practice. We don’t have it, and a new owner cannot make it happen,” Hilton said.
Frustration at report
The mostly pro-OCH crowd in attendance Tuesday wasn’t the only group frustrated by Stroudwater’s report, as District 3 Supervisor Marvell Howard and District 1 Supervisor John Montgomery said the almost $50,000 document left a lot to be desired.
Adding the cost of Stroudwater’s attendance to Tuesday’s meeting, the county will have spent about $60,000 for the firm’s work and could contract with it again if a transaction is pursued.
“When I do vote to spend money, I want results. When you say OCH is this, you immediately follow that statement and say it’s happening nationally. I’m almost believing that if you went and did this study for any other hospital in the state … it would have been very similar to this same exact study,” Howard said. “What you were commissioned to do was to do an analysis to put information in our hands that we would be able to make an informed decision with. From my perspective, that hasn’t happened.”
Montgomery said his fellow supervisors should drop the hospital issue before President-elect Donald Trump and Congress implement expected changes to the Affordable Care Act. Attempting to sell or lease the hospital before having a clear idea of changes to how insurance works and pays out is problematic, he said.
“My vote is going to be no for moving forward at this time. Not only do I feel like the community doesn’t want us to proceed, but there were also so many variables with the evaluation and how Stroudwater’s assessment was done,” Montgomery said.
While District 2 Supervisor Orlando Trainer and District 5 Supervisor Joe Williams have indicated their willingness to continue exploring hospital transaction options, District 4 Supervisor Bricklee Miller said after the meeting she was still digesting the information presented Tuesday.
It was Miller who pressed Stroudwater on how it produced data that conflicted with OCH’s own audited statements — the same ones sent to the firm for its report.
“Tonight was about asking tough questions on both sides. We’re still supposed to be gathering information from OCH and the community,” she said.
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch
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