The price of medical care in the US is a topic of conversation that leads to sharing of personal stories that can be frustrating at best and shocking at the worst. At TVHC, we agree that overall, healthcare should be more accessible for everyone. The devil is in the details and to get to the details, it’s crucial to understand what drives costs for small rural hospitals in particular. Here are some answers to many of the questions I hear about our hospital costs.
How much does it cost to meet your daily, monthly and yearly expenses? Do you know how much of your expenses are fixed and how much you can vary? A fixed expense is one you pay regardless of usage, like your mortgage or a car payment. You pay the same amount each month whether you are in the house or on vacation, and regardless of the number of miles you drive. A variable expense is where you pay based on usage and have some control over how much the bill will be, like your cell phone bill or cable bill. Why am I talking about this? Because we want you to understand that Teton Valley Health Care, like other companies, has fixed and variable costs, and that we have to ensure that our revenue covers both types of costs.
Like many firms, our biggest expense is the cost of salaries and benefits for our employees – this consumes over 60 percent of our monthly expenses. Some of our staffing costs occur regardless of the number of patients we treat. We staff 7×24 nursing coverage. We average 1.3 inpatients at any time, yet a single nurse could manage 6 or more patients simultaneously. We staff providers at all times in the ER, yet we average only 4.43 ER visits per day. I can go on with examples in the lab, the pharmacy, x-ray and imaging, etc. Why do we do this? Isn’t this the waste and inefficiency Washington keeps referring to? We staff to provide appropriate levels of local care 365 days a year, so we can be there when you need us.
I would love to “fully utilize” our RNs and ER providers. But we can’t staff an RN for only 10 minutes an hour, and you wouldn’t want us to have to call in a provider every time someone visits the ER. Not only would it significantly degrade the health care we provide, it would also put us at odds with some of the regulations governing critical access hospitals (not all regulations are bad). I don’t want to imply that we cannot control our staffing costs, in fact, 43 percent of our staff is part time or pool, and we always keep staff on call for surges in usage. Our ER providers also offer clinic coverage on the weekends and cover our hospital inpatients. Our neurologist, pain management specialist, and general surgeon are only here part time. But there is a base level of staffing (i.e., fixed cost) that we must maintain. Our costs are higher than larger hospitals because this base level of staffing is not as fully utilized as at larger hospitals; our cost is spread over fewer patients.
We maintain a 13-bed hospital and average 1.3 patients at a given time. We have some of the best imaging equipment around and use it 1/100 of the time that larger hospitals do. We have to follow the same regulations, reporting requirements, and documentation requirements as other larger hospitals, but we have fewer patients. We need the same electronic medical record systems as larger hospitals, but we spread that cost across fewer patients. This is not a gripe, this a fact of life for most rural hospitals. It costs more for us to operate per patient served than larger hospitals.
So what do we do? Our community has clearly said that a local hospital is a requirement. We agree. Without a local hospital, people would suffer more debilitating injuries and more people would die from emergency medical conditions. We would lose jobs, productivity, property value, and potential new community members.
We are working to grow, to become more efficient, and to better serve the community. We know that healthcare is expensive and that every dollar counts. We are committed to reviewing and adjusting our prices, making prices more transparent to the community, and working with those in need to assist in payments. But no matter what we do, we are, at times, going to be more expensive than other alternatives for health care that you may find. I don’t want to mislead anyone. The price of having a local hospital is that it will be more expensive. Is it worth it? Absolutely!
You have every right to ask what steps we are taking to lower the cost of health care. Those steps include:
- Increasing the amount of services we offer and therefore the number of people who use the hospital and clinics – when we increase usage, we reduce the average cost per patient
- Consolidating purchasing, constantly reviewing what we spend, and partnering with other facilities to help share or reduce expenses.
- Making smart decisions on what services are necessary — offer those services with the greatest benefit to the community and the most attractive cost profile for our size of hospital
- Partnering with other local hospitals to expand medical services that we don’t have the volume or capabilities to offer locally – expanded oncology care is one good example; we offer chemotherapy now and would like to offer further exam and treatment services.
In my next column, I’ll talk more about prices- how we set them, what we are doing to adjust them, steps we are taking to make pricing more transparent – and how to compare prices for healthcare. As always, I welcome comments and suggestions from the community. Please email me at firstname.lastname@example.org.