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Redwood Falls Gazette - Redwood Falls - MN
  • Financial issues a game changer: Redwood Area Hospital to see even less under Blue Cross payment method

  • When it comes to financing, the game has definitely changed for the Redwood Area Hospital; what makes the financial issues ahead for the local critical access hospital so challenging is the fact it is at the mercy of those who reimburse the hospital for its services....
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  • When it comes to financing, the game has definitely changed for the Redwood Area Hospital. According to Bryan Lydick, hospital CEO, those changes are going to mean becoming more efficient as it serves patients, ensuring those coming to the hospital are still able to get the high-quality care they need, when it is needed. “The hospital is in a time of transition,” said Lydick, adding the challenge is to weather the storm and come out even better on the other side of it. “We are in a good position right now,” he added. “The past success of the hospital has put us in a position to handle this better than most.” What makes the financial issues ahead for the local critical access hospital so challenging is the fact it is at the mercy of those who reimburse the hospital for its services. In the past, said Lydick, there were two traditional payment methods through which a critical access hospital was reimbursed. The challenge moving forward, said Lydick, is that the local hospital is now working with four different payment methods, with one method in particular having major impacts on the hospital’s bottom line. This payment method, implemented by Blue Cross and Blue Shield, offers payment for services on a more subjective formula based on patient diagnosis. “The new payment we receive is weighted based on how sick the patient is,” said Lydick, adding that is being determined by the services rendered and documented by the hospital. Yet, in the end, the amount paid is still up to the judgment of Blue Cross.
    Lydick said the hospital has known this new payment method would be implemented for some time, and with that, projected an $800,000 reduction in its reimbursements for the same level of services provided. Those reductions, which were to start last year, had been stalled until the start of 2014 with the help of the Minnesota attorney general. They are now in effect, and the hospital has learned the reductions over the next three years are going to be closer to $1.1 million. That, agreed Lydick, is a big hit for a small town hospital. While the cuts are coming, Lydick said patients are not going to see any difference in the high-quality care they can expect to receive at Redwood Area Hospital. “Patients have come to expect exceptional care at Redwood Area Hospital and we plan to hold true to that expectation,” said Lydick. Lydick said he did meet with representatives of Blue Cross where the hospital raised its concerns, which he said were heard. Heading into this new transition, Lydick is confident about the future. Lydick said as the local hospital looks to the future, there is a realization that change is going to happen. “Now we have to chart a blueprint for that transition,” Lydick said. The past performance of the hospital combined with a strong team of medical providers, em-ployees and volunteers makes Lydick excited about the opportunity to become more effective and efficient as an organization while looking for opportunities to optimize healthcare services needed in our community. There are a number of forces which are shaping local health care, and over the next few months the Redwood Gazette, in cooperation with local medical care facilities and governmental units, is going to provide added information about those forces and how they could impact – both positively and negatively – the future of that care.
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