WhidbeyHealth decreasing its costs to patients

WhidbeyHealth is lowering the price it charges consumers for physical therapy services, and also the costs of getting a CT scan and an MRI.

Physical therapy services will be reduced 28 percent; charges for computed tomography, or CT scan, are also reduced 28 percent, while costs for magnetic resonance imaging, MRI, will be decreased 38 percent.

Quality of the services will not decline with the bills, administrators said.

“This is highly unusual for a hospital to reduce your charges,” Ron Telles, chief financial officer, said during Monday’s monthly meeting of the board of commissioners overseeing the public health district.

It includes WhidbeyHealth Medical Center, eight clinics and three EMS stations.

The decision to reduce patients’ bills was made despite WhidbeyHealth’s unexpectedly higher expenses in 2018, which strained the budget.

Telles explained that WhidbeyHealth surveyed other healthcare systems in the region and found its costs to be higher.

WhidbeyHealth is able to slash patient service prices starting in January because it will begin saving money in several areas, Telles said.

“Now’s the time to reduce our charges and be more competitive with our hospital neighbors,” Telles said.

Ron Wallin, president of the board, said he knows consumers call other regional hospitals, such as Island Hospital in Anacortes or Providence Hospital in Everett, asking about prices of a particular service.

“We thought it’d be a good thing to do for the community,” Wallin said.

Costs to individuals will vary depending on insurance plans, so providing an example of cost reductions isn’t simple, WhidbeyHealth officials said.

“Regardless of our charges, the cost to patient varies by insurance contract,” said CEO Geri Forbes.

With that caveat, WhidbeyHealth provided an example of two common diagnostic procedures with “before” and “after” prices.

An MRI brain imaging exam without contrast would cost $1,743 in 2019, reduced from $3,336 in 2018; a CT head scan without contrast would cost $859 in 2019, reduced from $1,843 in 2019.

But estimating reduced charges is complicated.

“I can’t emphasize the variables enough,” said Ron Telles, chief financial officer. “‘Charges’ do not really reflect the cost to each patient. There is no simple equation here, as there are so many different payers and plans.

It’s not simple.”

Patients can request an estimate of the cost of a procedure or service by calling WhidbeyHealth or consulting the estimate calculation on the system’s website.

WhidbeyHealth estimated that reducing costs in physical therapy and diagnostic imaging means $8.4 million in lowered revenue.

Some of the lost revenue is expected to be recouped next year with small increases in visits to clinics, said controller Jennifer Reed.

Department heads were able to identify places to reduce costs in supplies and other areas, she added. The use of costly temporary doctors and nurses will decrease next year.

Reed also presented WhidbeyHealth’s 2019 operating budget Monday.

Overall, $111.5 million in net revenue is expected, about the same as 2018. Net expenses are predicted to be $111.4 million.

Reed noted that hospital outpatient services bring in 77 percent of revenue.

“It’s the outpatient that drives the revenue,” board member Nancy Fey commented. “I don’t think most people realize that.”

Of the $111 million in revenue, about $104 million is patient revenue and nearly $6 million is tax levy revenue.

Almost 60 percent of the operating budget is for salaries and staff benefits.

The budget includes a 2 percent to 2.5 percent in staff wages, the contracted union increase.

Commissioners unanimously approved the 2019 budget.

Several unplanned and costly expenses in 2018, such as outsourcing cancer drugs, won’t continue into 2019.

October’s financial picture looked similar to September’s presentation.

There were downward trends in the number of surgeries, emergency room visits and outpatient visits for CT and MRI scans, Telles said.

“We still show a negative in our bottom line,” he said. “October was the lowest emergency room visits in four years, total surgeries was the lowest in two years. Clinic visits did pick up coming off September.”

Where WhidbeyHealth’s bottom line ends up for 2018 won’t be known until early next year.