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Hospital Board discusses management contract

Hospital leaders Board President Tim Anderson (left) and HCMH CEO Jim Atty (right).

The Humboldt County Memorial Hospital (HCMH) Board of Trustees made no decision on renewing its management contract with Trinity Regional Health System on Monday, but the board did have a healthy debate about the matter and some changes and adjustments it would like to see in the contract.
The discussion started with Board President Tim Anderson saying he would like a management agreement that would help target operations (operating margin) at HCMH.
“For the past five or six years we have been dealing with a declining operating margin. I’d like to have (the management agreement) help point us in the right direction,” Anderson said.
Ralph Heasley, affiliate liaison with Trinity, said that having management fees linked to operating expenses is a concern throughout the hospital affiliate system in Iowa.
According to the 2011-12 audited financials, HCMH showed total expenses of $12,891,084. The management contract with Trinity for the coming year would represent .6 of that amount, or $77,346.50.
“Originally they were linked to a percentage of net revenues for the hospital. It was thought that was too difficult to track, or it could be linked to operating margin. Maybe that opens discussions on certain service lines. I think some discussions should take place,” Heasley told the board.
HCMH Chief Executive Officer Jim Atty said there would be implications for HCMH if the Lake City Hospital accepts a management contract with Trinity. Their board of trustees are in negotiations with Trinity, and would like to join the network as an affiliate.
“As we bring in more hospitals it dilutes the Trinity allocations to each of you,” Heasley told the board.
That is because of an overhead figure Trinity uses that pushes some reimbursable expenses back on the affiliate hospitals.
While adding a new affiliate to the system would be a good thing, it could be a $25,000-$40,000 negative impact for HCMH.
Atty said he believes the figure would be much closer to the $25,000 range.
For more news on this meeting, pick up a copy of this week's Humboldt Independent newspaper.