Hospital challenges Md. rate commission Tiny Atlantic General says allowed raise in fees is inadequate

February 06, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

Atlantic General Hospital, a tiny facility near Ocean City, moved yesterday toward the most direct confrontation in years between a hospital and the state's hospital rate-setting commission, saying the rates recommended by the commission's staff would not allow it to remain solvent.

The hospital asked for a hearing before a commission-appointed officer -- the first such hearing in about five years, according to Robert Murray, executive director of the Maryland Health Services Cost Review Commission.

And, if the commission doesn't give the hospital what it needs after the hearing, it will go to court to challenge the decision, said Don Annis, chief executive officer of Atlantic General.

Murray said no rate decision had been challenged in the courts in more than a decade.

"The story here is of an efficient hospital trying to make it," Annis said. "But we can't get off our knees as a start-up hospital."

The commission's rate-setting formulas "may be fair for a hospital that's been around for 100 years," Annis said, but work to the disadvantage of a hospital that is small and new.

Atlantic General, which received an 8.8 percent raise in July under the commission's inflation-adjusted formula, now is seeking an 11.6 percent rate increase. Based on costs at other small and rural hospitals, the commission's staff yesterday recommended a 6.5 percent increase.

The hospital, which opened in 1993, lost $3.8 million in the fiscal year ended June 30, 1994, $871,000 in fiscal 1995 and $1.9 million in fiscal 1996 -- during a period in which nearly every hospital in the state was profitable.

Atlantic General has 30 acute-care beds and 32 intermediate-care beds. It is in Berlin, just outside Ocean City, and serves local residents and injured or sick vacationers. The next closest hospital is Peninsula Regional Medical Center, 22 miles away in Salisbury.

Murray said the staff's rate recommendations were based on comparing various expense categories with similar hospitals and "without a doubt, the methodology is completely fair."

Robert Shelton, a lawyer representing the hospital, said older hospitals had been able to take advantage of a bonus built into the rate system for becoming more efficient, but Atlantic General is so new that it was already efficient when it opened.

Reviewing records

The commission's own formulas, which compare hospital costs based on the mix of cases they handle, show Atlantic General is now the lowest-cost in the state, Shelton said.

But as recently as a year ago, the same formulas showed it was high-cost, Murray said.

He said a consultant would be reviewing the records to see if some error in the data resulted in the big change.

Representatives of the hospital and the commission will meet to try to head off the hearing. But Annis said the hospital was not looking to negotiate a compromise: "We asked for what we needed, for what it will take to sustain our viability."

The hearing and commission action must take place by April.

Pub Date: 2/06/97

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