An article in Thursday's Southern Maryland Extra incorrectly identified the company that handles billing for Civista Health Inc. The company is NCO Group Inc. (Published 10/24/1999)
Charles County's only hospital asked the county Monday for a speedy $10 million loan, saying it needs help to weather a crisis brought on by billing failures and costly expansions.
County commissioners took no action and asked Civista Health Inc. to provide more details.
"We're trying to keep the hospital open," Board of Commissioners President Murray D. Levy (D-At Large) told hospital executives. But, he added, "Today . . . I would not begin to know how to justify" such a large loan.
Civista Health President Christine Stefanides said the financial difficulties, while serious, do not threaten to close the institution.
She said that bills had not been sent promptly to payers such as insurance companies and government agencies but that Civista is correcting the problem.
"This is money we are owed for services we've rendered," Stefanides said in an interview. "We will get the money back. . . . I believe we're already on the upswing."
However, Levy, who sits on Civista's board as a representative of the commissioners, said in an interview that the hospital may close unless it resolves its billing problems.
"They have used up all their cash and they're not getting enough money. It's that simple," Levy said. "When you get your money from insurance companies, you have to send them the bill."
He called for a detailed plan to staunch growth in accounts receivable--bills incurred but not yet paid. "The Board of Commissioners is committed to saving the hospital if it comes up with a plan to save itself," Levy said.
The 121-bed hospital, now called Civista Medical Center, was founded in 1939 as Physicians Memorial Hospital in La Plata. The county owns the building and the land upon which it sits. Civista Health oversees the hospital, a new surgery pavilion in Waldorf and a clinic in Bryans Road.
Since 1980, the county has issued about $10.5 million in bonds to finance additions to the hospital. Partly to ensure that that debt gets paid, the county retains the right to approve whether Civista takes on more long-term debt.
Civista officials said Monday they need $10 million by the end of the month. The sum includes $5 million to pay off a short-term line of commercial credit that expires in January.
The remainder is split evenly between a reserve fund and a fund to finance further anticipated shortfalls before improvements take hold in patient billing.
Stefanides said Tuesday that executives were assessing what amount short of $10 million could keep Civista solvent.
The hospital takes in about $50 million annually.
Levy, the commissioner, estimated that it is losing $2 million a month.
Pete Ryan, an accountant hired by the hospital, told commissioners that losses were running at approximately $300,000 a week.
In an interview and in her presentation to county commissioners, Stefanides, who took office in January, described a problem rooted in a decision two years ago to remove patient billing from within the hospital.
According to Stefanides, the company that took over the billing said it would reduce the revolving monthly balance of unpaid accounts by $5 million--a sum hospital officials counted on to finance expansions, including the surgery pavilion and women's center in Waldorf.
The $5 million did not materialize, yet construction contracts already had been let. Executives turned to the line of credit and by May had tapped it for $5 million.
In April and June, Civista installed new computer systems to avoid potential Y2K problems. Glitches in the new systems prevented Civista from sending out the normal number of bills.
Accounts receivable skyrocketed, from $13 million in March to nearly $21 million in August, according to figures Civista filed with state regulators. At Monday's commissioners meeting, Civista officials said the figure now stands at about $23 million.
Stefanides said that by September, many of the computer problems had been corrected and Civista was able to send out bills at triple its earlier pace. But, she said, the billing company recently had its own difficulties. At a meeting Friday in Baltimore, its executives said they could not confirm what bills they had forwarded to insurance companies, said Ryan, the accountant.
Executives with the billing company--CFO Group Inc., based in Fort Washington, Pa.--said it was blameless in Civista's plight. They said CFO's pace of billing was normal, and that they had received no complaints from Civista.
"I'm baffled," said Bernard Miller, chief executive of CFO's health care services.
CAPTION: Commissioner Murray D. Levy said the hospital may close unless it resolves billing problems.