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Rice Memorial Hospital reports its provided $18.5M in community benefits last year

WILLMAR -- Rice Memorial Hospital provided $18.5 million worth of community benefits in 2008 -- more than 20 percent of the city-owned hospital's operating costs.

The total includes benefits such as charity care, health fairs and free support groups for patients.

The biggest chunk by far, however, consists of Medicare and Medicaid costs that go beyond what either of these two publicly funded programs pay Rice for providing care. Costs in excess of Medicare and Medicaid reimbursement accounted for more than two-thirds of what Rice Hospital invested last year in so-called community benefits.

The hospital's annual community benefits report was presented Wednesday to the hospital board of directors. This yearly reporting is required for nonprofit hospitals in Minnesota to help demonstrate their accountability to the public. In 2007, the most recent year for which statistics are available, Minnesota hospitals provided $1.4 billion in community benefits.

"It is important to share what we are doing," said Bill Fenske, chief financial officer for Rice Hospital.

"We do a tremendous amount of things out in the community," agreed Mike Schramm, the hospital's chief executive. "There's a lot of things we do the general public does not see or know."

For instance, Rice provided nearly $390,000 worth of charity care last year.

"These are services we provide to low-income individuals that we don't expect to be paid for," explained Jackie Hinderks, Rice's reimbursement and reporting manager.

Benefits such as community events, education and support for patients, and in-kind staff time for a wide range of projects accounted for another $1.8 million. The hospital also makes a $200,000 annual payment to the city of Willmar in lieu of paying property taxes.

In dollars and cents, however, the underfunding of Medicare and Medicaid amounts to Rice Hospital's largest community benefit, Fenske said.

"If the federal and state government would pay us our cost, we could decrease our charges by 30 percent. That's what cost-shifting is all about," he said.

Medicare and Medicaid payment rates that fall below what it actually costs hospitals to provide the service have long been a sore point for hospitals.

"We have consistently tried to hammer that point home with legislators," Schramm said.

It's especially frustrating when the reimbursement rates continue to shrink in an effort to rein in the growing cost of these two programs, he said. "It's not going to help the problem to cut reimbursement because it's going to further strain the system. It might help in the short term but it really creates havoc in the long term."

Anne Polta

Anne Polta covers health care, business/economic development and general assignment. Her HealthBeat blog can be found at Follow her on Twitter at @AnnePolta.

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