With a projected increase in bad debt and charity care, inflation in supply and pharmaceutical costs and proposed facility improvements and repairs, Palo Pinto County Hospital District trustees are considering a nearly 2.5-cent property tax rate increase for fiscal 2020.
The board conducted the first of two public hearings Tuesday on the proposed 2019-2020 operating budget and tax rate. A second public hearing is scheduled for 7 a.m. on Tuesday, Sept. 17, in the Palo Pinto General Hospital board room.
The proposed tax rate of 37.48 cents per $100 property valuation is just under the district's rollback rate and above the current 35-cent tax rate.
The budget forecasts just a 4 percent increase in volume in the coming year and a $2 million increase in bad debt and charity care to a projected total of $30 million.
The budget calls for taking in a net $41.6 million in revenue, an increase of 5 percent over the current year, and $48.6 million in expenses, a 10 percent spending increase. The district projects a net income at the end of the year of $354,934, following several years of net incomes between $2.7 million and $4.4 million.
"We are looking at a very minimal amount of volume and rate increases on the revenue side," Finance Director Daniel Smith told the Index. "Costs are going up. We are projecting inflation is about 3 percent."
He said Medicare is expected to increase reimbursements 2.4 percent, below the inflation level. Insurance companies could increase their reimbursement rates 3%-4%, Smith said.
"The cost of doing business continues to rise," Smith said. "Medicare rates are not keeping up with inflation."
"Our pharmaceutical costs continue to rise," new hospital CEO Ross Korkmas told the Index. "That's a tough pill to swallow for any hospital."
In an effort to increase volumes and revenue, Korkmas is working on bringing new primary care physicians to Mineral Wells. Current physicians are not taking new patients.
Other areas he is addressing are salaries and full-time staffing. The hospital plans to have 321 full-time employees on the payroll next year and a salary cost increase of about $3 million through raises and some additions.
Employee health care benefits are projected to rise 10 percent, and the hospital district plans to cover 5% of that increase for its full-time personnel.
"The employees live here and spend money here," said PPCHD board President Lori Baker-Boyd. "I appreciate your leadership and I appreciate you doing that for our employees."
Property tax rate revenues go entirely to maintenance and operations. The hospital does not carry borrowed debt. It does operate a main building that is 50 years old. The budget calls for up to $3 million in capital expenses for repairs, improvements and some new equipment.
Trustee J.C. Colton lamented the fact that Texas years ago decided to not participate in the federal government's Medicaid expansion program because the state did not want to take on its share of costs for an additional 1.5 million eligible participants.
"Who has to pick that up? We do," said Colton, referring to the district's charity care costs.
Korkmas said he is still in the process of analyzing the hospital's operations and services to identify needs and improved operating efficiencies.
"I am just now starting to dig in and look at what new services we can offer in Palo Pinto County so people don't have to leave," he said.
Smith said strategic planning will be key going forward.
"We are a very stable organization," he said. "We have some very good leadership. Ross is a great addition to this team. I think he has his own perspective and experience that will add significantly to the growth of this hospital."