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Health care providers try to stop the bleeding

Published Sep. 29, 2005

When announcing the closing of its outpatient surgical center and walk-in clinic at PineBrook Regional Medical Center, Health Management Associates Inc. blamed federal budget cuts for making the center unviable.

"The (Balanced Budget Act) reductions, coupled with further anticipated revenue decreases . . . estimated at $330,000 a year, have necessitated a hard look at our expenses," wrote local chief executive Tom Barb. "To preserve our ability to provide quality service to our patients in the hospitals, we are eliminating these marginally successful outpatient services."

The decision seemed odd because hospital companies have funneled more patients to surgical centers and outpatient clinics for years. Federal reimbursement practices simply made the option more financially attractive.

And with the increasing number of new doctors offices and walk-in clinics that have sprung up in Spring Hill and along Cortez Boulevard, PineBrook appeared to be well-established in a growing market. Its proximity to the upcoming Suncoast Parkway didn't hurt either.

However, in the wake of the Balanced Budget Act, changes in the Medicare reimbursement might have made outpatient centers, like PineBrook, less profitable. Hospitals soon will begin receiving fixed compensation rates for outpatient treatment as well as in-hospital treatment, said Robert Trinka, vice president of McKenna & Associates Managed Care Insurance Services, a national health care insurance services company. Before the new federal rules, hospital companies could bill Medicare for charges instead of using the government's complex system.

With reimbursements increasing at a slower pace than costs, hospital companies nationwide say they can't keep up.

"Basically, if you're a hospital, your revenue is being controlled and regulated but your costs are not," Trinka said. "Slowly but surely that deficit widens."

Industry trade groups have been lobbying furiously to win some relief from the Balanced Budget Act cuts, many of which have not yet taken effect. Budget hawks in favor of the cuts say hospital companies are exaggerating and simply trying to maintain their profit margins.

While HMA posted lower earnings than Wall Street analysts expected, the company still reported third quarter net patient service revenues of $352-million, up from $302.2-million a year earlier.

At PineBrook, the problem might have also been historical. The center had never captured the bulk of its market.

"They've been having trouble for a while to keep the center viable," said gastroenterologist Ramakrishna Kanuri of the Hernando Endoscopy and Surgery Center in Spring Hill. "Historically, for some reason, it's not done well."

Local physicians with surgical centers, like Kanuri, or walk-in clinics, like Good Shepherd Medical Clinic on Cortez Boulevard and the Akel Riverside Walk-In Clinic on Commercial Way, might be the real beneficiaries of PineBrook's centers closing.

Independent clinics can operate under lower overhead and have more efficient billing staffs, making it easier to bill Medicare correctly and swiftly, said Mark Denner of the Springs Family Medical Center in Spring Hill.

"You have to be knowledgeable about the changes in insurance company's billing. You have to be knowledgeable about what's going on," said Denner, a doctor who recently moved his family medical practice into a new building about a mile west of Oak Hill Hospital with partner David Miller, also a board certified family practitioner.

In Pasco County, Morton Plant Mease's Trinity Outpatient Center has been a reflection of the company's belief that outpatient services are the future, spokeswoman Amy Lovett said. The company recently bought 20-acres in northern Pasco County near the Suncoast Parkway's exit onto County Line Road. The company still has not revealed its plans for the property.

Like other health care companies, including HMA, Morton Plant Mease is trying to deal with Medicare cuts.

"Everybody has seen reduced reimbursements," Lovett said. "What we're trying to do is best understand what is coming down the road."