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Medical billing system ‘costly’

But it’s the ‘best model we have,’ KSB chief says

David Schreiner
David Schreiner

DIXON – David Schreiner, CEO and president of KSB Hospital, predicts that the United States is headed toward a single-payer health care system, which is what Canada and much of Europe have.

“I’m not saying that I like that model,” he said, but added that it’s been successful in other countries.

He said his job is to maximize the financial health of the nonprofit KSB, “so that we can take care of our patients.”

So would a single-payer system help achieve that goal?

It would work for KSB, Schreiner said, if it covered the costs of providing care, which Medicare and Medicaid do not.

As with CGH Medical Center and other hospitals, privately insured patients subsidize just about everyone else at KSB, including Medicare and Medicaid recipients.

KSB does have an edge over CGH in one regard, though. It gets higher reimbursement levels, because it is considered part of the metropolitan Chicago wage classification index.

“It makes a difference. It is an advantage of us being 11 miles closer to Chicago,” Schreiner said in an interview in his office. “It’s like for other things. Sterling goes toward the Quad Cities more, while we go more toward the suburbs.”

KSB is smaller than CGH, with revenue of about $130 million a year compared with CGH’s nearly $200 million. KSB has about 1,000 employees to CGH’s 1,400 and 80 beds to CGH’s 99.

The size difference is understandable, given that Sterling-Rock Falls is larger than Dixon.

‘The cost of billing affects everyone’

In the United States, the health care finance system is complicated. It takes a lot of people to figure out who pays what.

CGH estimates that 125 workers are on staff because the health care billing system is so complex. KSB puts its number at 72, which is the total of employees in the patient financial services and health information management services departments.

That number, Schreiner said, doesn’t even include those who work for insurance companies.

“The cost of billing affects everyone,” he said. “The complexity of getting the bill out the door is far too costly. It’s negative for patients, physicians, everyone.”

One of the hospital’s biggest frustrations is the lag time between when services are provided and when insurance companies pay providers.

Insured people pay their premiums, Schreiner said, yet insurance companies take months to pay for services provided to those they cover.

“Why don’t we incentivize the insurance companies to process claims as quickly as possible?” he said.

Every hospital has what is known as a “chargemaster,” the complete list of prices for billable items and services. At KSB, it is about 1,000 pages.

Insurance companies are paid based on a percentage of chargemaster prices. Medicaid and Medicare pay even less than private insurance companies – at reimbursement levels determined by the government.

As for the chargemaster, Schreiner said, “it’s a starting point. It’s cumbersome. It’s frustrating, but it’s the best model we have out there right now.”

Schreiner declined to say how he believed the Affordable Care Act, or Obamacare, would affect the hospital financially. “It’s too early,” he said.

But he feared that businesses with fewer than 50 employees – who will have no requirement under Obamacare to insure their employees – might stop providing insurance and, instead, give workers checks to buy insurance on the Affordable Care Act’s marketplaces . Some people, he said, might take their checks, spend the money on other things and pay Obamacare’s relatively small fines for not getting insurance.

KSB reinvests any net income back into the hospital. One example is the recent addition of a new intensive care unit.

As a nonprofit, KSB officials say, the hospital takes its mission seriously.

“We take everyone who walks through the door,” said Tom Demmer, the hospital’s director of marketing and strategic planning and a Republican state legislator from Dixon. “Our inpatient psychiatric unit is a tremendous service to the community, but we lose money on it ever year.”

The goal, he said, is to provide services to the community.

A KSB, CGH merger?

Both CGH and KSB acknowledge that hospital chains have approached them about buying their facilities.

Neither has shown interest.

“Our board has made the decision that it wants the hospital to remain independent,” Schreiner said.

Even the two area hospitals have discussed merging. So far, no go.

“We have talked about combining – every 10 years or so,” said Schreiner, who started with KSB in 1989 and took the helm 3 years ago. “There are no active discussions now.”

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