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Phoebe Putney-Bad Facts and All Fiction

Mar 20, 2018 | frontpage, March2018 |

Joel Wernick

Will Geer

By Will Geer Phoebe Factoids

Per information provided within its audited financial statements, “Phoebe Putney Memorial Hospital, Inc. is a notfor-profit healthcare organization that exists to serve the community.” Phoebe is responsible for improving “the health and well-being of Southwest Georgia through clinical services, education, research and partnerships that build health capacity in the community.” Phoebe is required to “provide community benefits for every citizen in its service area, as well as, for the indigent and medically underserved.”

These requirements are part of federal requirements of operating as a notfor-profit healthcare organization. The healthcare industry refers to these responsibilities to the community and mandates that hospitals prepare and address the needs through a Community Health Needs Assessment. Hospital websites typically provide outlines or documentation of these assessments,
while the federal government requires the information to be reported with in the financial statement, audit reports and the tax returns submitted to the Internal Revenue Service.

The concern with the information in the Community Health Needs Assessment and the self-reporting by the not-for-profit healthcare organizations is the auditor specifically states, “Such information has not been subject to the auditing procedures applied in the audits of the financial statements, and, we do not express an opinion or provide any assurance on it. Meanwhile, the Internal Revenue Service treats the information as a required submission, never considering the truthfulness of the information. The information is simply offered by the organization (Hospital) without oversight and verification by any independent third-party.

In the case of Phoebe Putney, the most prominent claims are the amount of losses created from services provided to Medicare, Medicaid and indigent patients. While it is difficult to substantiate or refute the information without internal documentation, it is possible to backtest the information against comparable hospitals or against documentation submitted to organizations for which Phoebe is required to report. Phoebe banks on no one checking behind the information they report.

Upon review of supplementary information in Phoebe’s audit report, Phoebe claims to incur $263 million of “estimated unreimbursed cost.” This unreimbursed cost is composed of $176 million in Medicare, $66 million in Medicaid and $21 million in Indigent and Charity. We also know that Phoebe’s operating budget is approximately $500 million, so these unreimbursed costs would represent more than 50% of the total operating budget. Phoebe’s payor mix consist of 17% Medicare, 15% Medicaid, and 68% Private Pay/Insurance.

You can begin to see that unreimbursed cost for Medicare and Medicaid reported at more than 50% of cost does not make sense, when the portion of cost from these services should be the total of 17% and 15%, or 32%. Adding more information to the equation, the average reimbursement rate as a percentage of cost is 85% for Medicare and Medicaid. So, basically, 85% of total cost for these patients is paid to Phoebe by the government, leaving only 15% unpaid. Thus, Phoebe is telling you the $176 million plus the $66 million represent the 15% unreimbursed portion. That is impossible.

Next, we compared Phoebe’s purported revenue numbers to a comparable hospital. The hospital chosen was South Georgia Medical Center in Valdosta, GA (SGMC). The total revenue of SGMC is smaller than Phoebe, but the Medicaid reimbursement totals from the Georgia Department of Community Health are similar. Furthermore, Lowndes County (Valdosta) has a larger population than Dougherty and proportionately equal amounts of uninsured. SGMC reports unreimbursed cost of Medicare at $18 million, while Phoebe reports unreimbursed Medicare at $176 million. SGMC reports unreimbursed Medicaid at $26.5 million, while Phoebe reports $66 million. These are large disparities that cannot be accounted for in the difference in revenues, based on payments from the government and private citizens. The demographics for Valdosta and Albany can’t be that different to have Phoebe reporting those unbelievable amounts they claim are unreimbursed by Medicare and Medicaid.

Lastly, for the same period of time as the audit report information, we have obtained the Cost Report submitted to the Centers for Medicare and Medicaid. These reports reflect dramatically different information than Phoebe Putney reports to the public. For instance, the July 31, 2016, cost report reflects Medicare cost to be fully reimbursed and Medicaid Cost to be reimbursed
with a $3.5 million shortfall. The $3.5 million shortfall is covered by a $13 million Disproportionate Share payment from the Georgia Department of Community Health. The same Cost Report shows the cost of uninsured charity care at $10 million, while Phoebe is reporting $21 million. It does not add up! These reports from Phoebe need to be examined and fraud needs to
be ruled out.

The bottom line is that Phoebe Putney officials need to be held accountable and become transparent with everything they do, including the representations made to the public. The County Commissioners and the Hospital Authority are responsible for holding Phoebe accountable. They are charged with the responsibility to ensure that the public is actually receiving the healthcare and health benefits claimed by Phoebe. Phoebe operates in a Black-Box and objects to any outside party requesting information to verify its value to the public. If the status quo remains, the health and welfare of the community shall continue to spiral downward. The evidence is already in Phoebe’s healthcare rankings as reported by multiple healthcare organizations
and Dougherty County health statistics.

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March 2018 Vol. XXI No. 2