TAHOE/TRUCKEE, Calif. — As an internal investigation into Tahoe Forest Health System’s conflict of interest policies continues, the district is facing greater public scrutiny on how it operates.
“I think part of the problem that I’m experiencing is there’s a huge lack of trust, and I think the community is feeling a huge lack of trust,” said Truckee resident Lynne Larson at the July 22 board of directors meeting. “When we have this open-ended kind of thing, that whole trust issue comes back into play.”
Her comment came during board discussion of OK’ing an information systems expense item, at a time when the district’s finances and cost of care have recently come into question.
Crystal Betts, chief financial officer for the hospital district, said a 2013 audit reported an operating loss of $5.8 million, which includes depreciation as an operating expense.
However, considering the district treats depreciation as a non-operating expense, Tahoe Forest saw an operating income of $1.6 million last year, she said.
“What’s most important for the community to understand is that our depreciation expense is the largest single contributor to the change in our net earnings,” Betts said.
As for fiscal year 2014, due to deprecation, the district projected a $1 million net loss, but final numbers are expected to be more positive, she said.
In a July 23 statement, the hospital board said the district’s cash reserves are “very strong.”
“We are expected to exceed earnings budget for fiscal year ending June 30, 2014, with earnings of about 2 percent despite a weak winter season, as operating expenses were successfully reduced to meet diminished needs,” the board wrote.
COST VS. QUALITY
In connection with district finances, some community members have characterized Tahoe Forest’s costs as “outrageous.”
“I brought (someone) in last year who drank too much, over drank, and she ended up for one night in the emergency room, and the bill was so outrageous; it was unbelievable,” said Truckee resident Ruth Cross at the July 22 meeting. “At some point, costs have to be brought under control, and it doesn’t mean at the sake of employees or the sake of the people in this district.”
Cross chose not to add to her meeting comments when the Sierra Sun reached out for a follow-up interview.
The idea of lowering hospital bills would likely come at a cost, said Tahoe Vista resident Randy Hill, who’s a hospital volunteer and former chair of the $98.5 million Measure C bond campaign.
“What is being missed in this public debate is the fact that making our local health care ‘affordable’ — affordable to whom and by what standards — would necessitate reducing or eliminating any number of services to which we have all become accustomed,” he said. “Imagine a public agency, in this case a hospital, decides it will no longer offer something that is important to you. ... The drama and vitriol currently taking place in our community would pale in comparison.”
Further, Tahoe Forest is highly regarded by community members for its quality of care, with the district earning distinctions such as it being named a Rural Center of Excellence by UC Davis, and its recognition in 2011 by the National Rural Health Association as a Top 100 Critical Care Access Hospital.
“Tahoe Forest Hospital has an exceptional medical staff and support staff,” said Jamie Cole, a Truckee resident and former TFH employee. “The staff is wonderful. They are caring, dedicated and professional. Our community is also fortunate to have exceptional physicians.”
GOING OUT OF AREA
However, Cole also takes issue with cost of care, specifically with cancer treatment.
“Patients should not expect treatment to be free nor should they be financially bankrupt,” Cole said. “It is morally wrong, in my opinion, of the hospital to price drugs so far above the actual cost.”
In an attempt to provide context of cost through one small example, the Sun pulled a hospital bill of a newspaper staff member.
In 2011, the staff member visited the emergency room at Incline Village Community Hospital, which is part of Tahoe Forest Hospital District.
Doctors performed tests and determined the person had contracted Influenza A, was prescribed medication and released. The staff member eventually received a bill for $897.50 for the roughly hour-and-a-half long visit.
Line items included a $457 emergency room charge, $151 for a respiratory lab culture and $15.50 for one 800-milligram Motrin tablet.
Various web searches show one can purchase 500 tablets of 800mg ibuprofen for as low as $39.95; or, one could purchase a bottle of 100 tablets of 200mg Motrin ibuprofen for $5.99.
Cost concerns like those from Cole can drive locals to seek other treatment facilities, said John Falk, a legislative advocate in Truckee.
“The cost differential between our local facility and those in Reno and the Sacramento area can, and have, driven me to seek services out-of-area on occasion,” he said. “Call it ‘out-migration’ or ‘customer leakage,’ it speaks to a larger issue — the cost of service has a chilling effect on local resident usage of the facilities they contribute to (pay for), via property taxes and special assessments (such as Measure C).”
‘ASSESSING THE VALUE’
In a July 15 open letter, District CEO Bob Schapper said the public needs to weigh cost against quality of care.
“TFHS is well below the median pricing compared to other hospitals in our regional ‘cohort,’” he wrote. “... When you consider what a very high-quality hospital TFHS is, evidenced by very low to non-existent infection rates, high patient satisfaction, robust surgical care improvement program, low pneumonia rates and excellence and innovation awards, TFHS is perhaps the highest value health care provider in the region.
“Frankly, these indicators should be the highest priority when assessing the value of any health care system.”
When asked for details on median pricing, Betts said the district did a study using information on the California Office of Statewide Health Planning and Development website, which shows the 25 most common outpatient procedures performed in a hospital, and compared pricing for those procedures to eight other hospitals that would be considered comparable or within our region.
“In most cases the district’s pricing was at or below those we were compared against,” Betts said. “We take the pricing issue very seriously and are working to improve price transparency.”
Schapper added in his letter: “Hospitals must, without exception, care for everyone who comes through our doors, regardless of their ability to pay. Everyone must be served, yet no one is ‘forced’ to pay. No other business in the world is required by law to operate in this fashion.
“Hospitals have no reliable revenue sources, are expected to employ highly skilled workers and care for thousands of patients with less and less resources. These are national issues. There is no denying the cost of health care is high.”
CONFLICT OF INTEREST?
Schapper’s comments came after Moonshine Ink published a July 11 report, raising examples of a potential conflict of interest with him, and the hospital’s involvement with Medical Practice Solutions Inc., a company operated by his wife, Marsha Schapper.
When asked to address his connection with MPS, Schapper stated the following in an email to the Sun: “As has been disclosed many times over the years, I have been a participant in name only in Medical Practice Solutions. I am not an active participant in the corporation. ... “The accounting and tax terminology for this is ‘substance over form’ meaning that I was listed on paper, but factually had no involvement.”
Despite that, the board reportedly began an internal investigation in connection with the district’s conflict of interest policies in May, and a report of any findings or conclusions is expected soon.
Falk said he is “disappointed” that the issue has gotten to this point.
“The mere appearance of impropriety is worthy of early and decisive action, whether it be to clearly articulated that the issue was considered and deemed legitimate, or to reject or rescind the inappropriate contractual arrangement, cleanly disassociating our hospital district from any such charges,” he said.
That sentiment is echoed by Truckee resident Gaylan Larson, husband to Lynne.
“The governing board, including the CEO, should always back away from the gray areas where conflict of interest is even possible,” he said. “The governing board must earn trust from their public and any suggestion of impropriety erodes that trust.”
“Patients should not expect treatment to be free nor should they be financially bankrupt. It is morally wrong, in my opinion, of the hospital to price drugs so far above the actual cost.”
Truckee resident and former TFH employee