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State budget unlikely to affect Rice

WILLMAR -- Minnesota's budget deficit is unlikely to have much direct impact on Rice Memorial Hospital, say hospital officials.

Most of the state funding the hospital receives is in the form of third-party payment from the Medical Assistance program, which covers health care for the poor.

Medical Assistance could be vulnerable to cutbacks as legislators struggle to fix the state's financial woes. If this happens, the fallout would be felt by medical providers who might see reduced reimbursement rates for care given to Medical Assistance patients.

But at Rice Hospital, Medical Assistance makes up a relatively low percentage of the overall revenue, said Bill Fenske, chief financial officer.

"We are pretty low compared to state averages," he said.

Hospital officials discussed the state and federal budget outlook Wednesday with members of the hospital board of directors.

The publicly funded Medical Assistance program has traditionally accounted for 5 to 6 percent of Rice Hospital's overall volume, Fenske said.

More recently, the number of Medical Assistance patients at Rice has grown, so that the program now makes up 11 to 12 percent of the hospital's revenue -- but this is still lower than the majority of Minnesota hospitals, he said.

In any case, Rice doesn't count on increased Medical Assistance dollars in its annual budget, Fenske said. "We never project additional Medical Assistance money in our budget."

At the federal level, a 3.6 percent increase in Medicare reimbursement also appears to be secure for the 2009 fiscal year, he said.

Although the final figures aren't in yet, Rice Hospital ended 2008 with a profit, said Dale Hustedt, interim chief executive.

The 2008 audit is scheduled to take place in February.

Staying in the black for the second year in a row hasn't been easy, Hustedt said. The hospital would have had a deficit if it hadn't been for $3 million worth of budget cuts last August, which included eliminating two outpatient chronic-disease management programs, laying off staff and cutting hours for other employees.

Similar pain is being felt around the state, Hustedt said. "An awful lot of hospitals are really hurting right now."

Many Minnesota hospitals ended the year with red ink on the balance sheet, Fenske said. "We could very well be in the minority of prospective-payment hospitals that made money in '08."