The Richmond Register

Local News

August 10, 2012

Health department layoffs delayed

Home health agency posts loss for 2011-12

RICHMOND — Despite ending the fiscal year in the red because of the deficit incurred by its home-health agency, recent resignations and retirements will allow the Madison County Health Department to delay planned layoffs and staff time reductions.

The deficit will be offset by dipping into a $3 million reserve created from surpluses in previous years, officials said.

In June, the Board of Health approved a $12.8 million budget for the 2012-13 fiscal year that included laying off three employees and reducing the hours of six staff members. The changes were expected to be made in July.

Health Director Nancy Crewe told the board Wednesday night that six staff members have resigned and two people have retired since June’s meeting.

One of the resignations was Debbie Kerr, nurse supervisor for the Richmond and Berea locations. A current staff member, Dora Shepherd, will be promoted to Kerr’s position while also continuing her duties of supervising the Access staff.

Because of the employee turn-over and resulting attrition, Crewe said the staff reductions will be postponed, and the agency’s financial situation would be monitored on a “month-to-month basis.”

Chief Financial Officer David Reed said that while health department services posted a $176,000 surplus for Fiscal Year 2011-12, which ended June 30, the board’s home health agency, MEPCO, posted a $611,000 loss. This left the overall agency in the red with expenditures exceeding revenue by more than $434,000.

The state’s decision to have managed care organizations (MCOs) handle Medicaid reimbursements in order to reduce costs is one of the reasons behind the financial loss, Reed said. The switch from state employees making reimbursement decisions to having three private MCOs take over the responsibility occurred in November, months after the health board approved  the 2011-12 budget based on revenue projections calculated earlier.

Reimbursement rates for MEPCO services have declined, Reed said.

His presentation showed Medicare revenue was $629,000 less than what was budgeted for 2012, and Medicaid revenue was down $209,000 from what was budgeted.

Insurance revenue also was down $268,000 from what was projected for the fiscal year.

Dr. John Johnstone, board vice chair, warned that Medicare and Medicaid reimbursements will continue to decline, and the health department needed to plan accordingly.

In the FY 2012-13 budget, the health department adjusted its expected Medicaid reimbursement down by 21 percent compared to the previous year.

Reed said the $434,000 overall loss was offset using surplus funds held in reserve from previous years. The reserve totals about $3 million, Reed told the board.

With the $3 million in reserve, plus another $4.3 million kept in reserve, primarily for capital projects, the health board has a contingency fund of about $7.3 million, Reed said.

“That is a sizable war chest to cushion us,” Reed said.

Also during the meeting, Crewe told the board that because of dwindling public health funds, Kentucky health departments are discussing instituting policies that prohibit people from receiving certain services away from their home jurisdictions.

Crewe said while this hasn’t been brought up in Madison County, the Kentucky Health Department Association will be coming out with some recommendations about the issue.

Sarah Hogsed can be reached at shogsed@richmondregister.com or 624-6694.

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