Judge declines ombudsman position for NRMC

Published 12:12 am Friday, April 25, 2014

NATCHEZ — The federal judge overseeing Natchez Regional Medical Center’s bankruptcy proceedings declined Thursday to appoint a patient care ombudsman for the county-owned hospital.

Also during testimony Thursday, Healthcare Management Partners Chief Executive Officer Scott Phillips said he expects for the financially beleaguered hospital to have a signed purchase agreement from a buyer in the next 48 to 72 hours.

When Judge Neil P. Olack ruled he would not appoint an ombudsman — whose duty would have been to ensure patient care quality remained consistent throughout the bankruptcy process — he left the possibility open he could appoint one later.

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“I have no way of knowing if there is a change of circumstances,” Olack said. “If someone finds something that they believe will affect patient care, they have an obligation to bring that to the attention of this court.”

When asking Olack to waive the ombudsman appointment, NRMC’s bankruptcy attorney Eileen Shaffer said the hospital has enough internal and external safeguards in place to protect patient care, including maintaining compliance with federal and state regulations.

CEO Donny Rentfro likewise testified the hospital has maintained all its accreditations.

When Phillips took the stand, he testified he was the one who recommended the hospital declare bankruptcy after observing rapid declines in the hospital’s cash balances when he reviewed the hospital’s books as part of the initial steps taken in June to sell the hospital.

HMP was hired to help market the hospital. Since petitioning for bankruptcy, the company has been hired in a financial consulting role as well.

As part of the initial sale process, Phillips reviewed the hospital, he said.

“I observed a clean, efficient operating hospital,” he said. “I went through the general storeroom, and the shelves were full (of supplies).”

Phillips described NRMC not as a failing hospital, but as “a successful hospital operating in a hostile market situation.”

Phillips said the financial situation was caused by a perfect storm created by the demands of the sale of the hospital, reductions in payments from Medicaid and Medicare because of negative Recovery Audit Contractor audits, changes in leadership in the hospital’s billing department and a 5-percent downturn in patient census.

“All of that caused the hospital to briefly lose control of it,” he said. “It was brief, but it was substantial.”

Recovery Audit Contractor audits review Medicaid and Medicare billing, and — based on the independent auditor’s opinion of the documentation associated with the billing — decides if the services rendered were appropriate, Hospital Chief Financial Officer Charles Mock testified.

For example, a RAC auditor may deem that an inpatient procedure should have been an outpatient procedure by purely looking at the documentation, Mock said.

“A RAC audit is one professional reviewing the notes on the charges and seeing it in a different way from the professional who rendered the charges,” he said. “The issue is the thoroughness of the documentation.”

RAC audits cost the hospital $2.4 million in payments in 2012 and 2013.

Much of the testimony at Thursday’s hearing centered around the hospital’s patient complaint and review policies. Chief Nursing Officer Barbara Willis testified the hospital received 52 complaints in 2013 — one a week — and said the average is slightly better than most hospitals of the same size.

Communications Director Kay Ketchings, who also handles patient complaints, said she has only logged nine complaints in 2014.

Willis and Dr. Hendrick Kuiper — a surgeon at NRMC — testified they have always had the equipment and staff they needed to render the appropriate care for patients.

Mock testified the hospital has never missed payroll, which is approximately $500,000 every two weeks.

“Sometimes it gets close, but we get there,” he said.

Rentfro said the hospital has released a family practice doctor and did not renew contracts with a cardiologist, neurologist or vascular surgeon in recent years because of a “lack of volume” in patients to sustain their practice.

During Phillips’ testimony, he told the court he believed an ombudsman could cost the hospital at least $100,000 a month based on reviews of similar cases.

“Hospitals are complex organizations,” he said. “Unless an ombudsman is brought in for a particular need, there is a potential for them to create harm as they distract people. If they aren’t coming from a medical background, they can do things that are at best not helpful and at worst harmful.”

The hospital has a plan to pay its creditors, Phillips said, but having to pay an ombudsman as well could upset that plan.

“(The plan) depends in part — if it is to be a full recovery — on the debtor’s ability to manage the administrative costs of the case,” he said.

Phillips likewise said the hospital’s negotiations with its potential buyer could be coming to an end soon with the signing of an asset purchase agreement in the next two to three days.

“After that, we hope to close the sale in 90 days,” he said.