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For more information, contact
Jim Schulte, Hospital Administrator at
507-637-4511.
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Frequently Asked Questions
August 2006
Q:Why is the Hospital Commission and City Council looking at
remodeling the hospital patient rooms?
A: Fortunately, the people involved with planning the 1967
addition had the wisdom and foresight to put in all private
rooms, with private toilets, tubs and showers. This has served
patients and the community well for 40 years.
However, the size
of the patient bathrooms and rooms now have become a safety
issue. The bathrooms are not large enough for staff to safely
assist patients. The patient rooms are not large enough to
safely accommodate the larger variety and size of technical
equipment used today - - and the number of doctors and nurses
needed to use the equipment in an emergency to help save lives.
Q: How much will it cost?
A: Remodeling the entire patient room second floor area,
updating the mechanical infrastructure throughout the entire
hospital complex, expanding and remodeling the therapy suite is
estimated to cost around $12 million.
Q: How will it be paid for?
A: It is anticipated that the majority will be financed through
long term (25 - 30 years) hospital revenue bonds, and other
funds will come from hospital reserves and fundraising.
Q: How will the bonds be repaid?
A: They will be repaid by hospital revenues over the life of the
bonds. Several years ago, Redwood Area Hospital received
designation as a Critical Access Hospital by the Medicare
program.
This means that the hospital’s revenue from the
Medicare program is determined by the costs of providing care to
Medicare patients. At least half the hospital’s patients are
covered under Medicare.
So, that means that Medicare will cover
at least half the cost of the bonds over the life of the bonds.
Q: Won’t this increase the cost of local hospital care?
A: Generally speaking, building and building related costs are
ten percent, or less, of hospital budgets. So, the remodeling
costs will be increasing a relatively small part of the hospital
budget.
In comparison, at least half of hospital costs are
payroll and payroll related. Health care truly is people caring
for people. Facilities are important as a means of helping
hospital staff to do the best job they can of caring for people
who need the hospital services.
Q: But won’t this increase hospital charges?
A: Again, any increase related to these costs will be relatively
small over each of the next 25 -30 years. No matter where a
person receives hospital care, a part of the bill is to cover
the cost of the buildings and equipment.
Q: Isn’t it unwise for the City to be considering these
projects when Artesyn is closing and the local economy is not so
strong?
A: City general funds and property taxes will not be used for
the hospital projects. Only future revenue from the hospital
will be pledged to repay the hospital bonds.
The remodeling
needs to be done to continue providing quality and safe health
care. And the Medicare program will pick up at least half the
future costs, so the hospital is not heavily dependent on volume
and revenue coming from the younger workforce.
Q: But what if reimbursement from the Medicare program changes
in the future?
A: It is true that Congress could change the payment formula in
the future. As the saying goes, “nothing is safe while Congress
is in session.” But, we all must make decisions every day that
are based on today’s facts.
It is expected that the country will
stand behind the need to maintain current state-of-the-art
hospitals. And the hospital did survive (and sometimes thrive)
in the 20 years before returning to Medicare cost-based
reimbursement.
Q: Why weren’t the patient rooms remodeled at the same time the
new east addition was completed in 2000?
A: When the east addition was being planned in the mid 1990s,
hospitals were paid by Medicare on the basis of the patients’
diagnoses (DRGs). This payment was then declining to the point
of being less than the cost of providing the care.
It would not
have been as prudent to consider remodeling patient rooms at
that time. The east addition was primarily designed to
accommodate the move to outpatient services that occurred in the
1980s and 1990s.
Q: Why wasn’t more done to upgrade the hospital’s mechanical
infrastructure when the last addition was completed in 2000?
A: Again, the Medicare program at that time did not provide the
same reimbursement it does today to help cover construction and
remodeling costs. Since at least half the hospital’s patients
are covered under Medicare, this program heavily influences
decisions on such projects.
Q: Why not just build a new hospital complex on the edge of
town, like some other communities are doing, instead of sticking
money into the older buildings?
A: The community rightly invested money in the east outpatient
addition at a time when that is all Medicare reimbursement would
seem to allow. It would not appear prudent to now “throw away”
that investment. Also, the 1952 west wing allows us to house
services for which it would not be as economical to construct
new, more expensive space.
It is estimated that it would cost $25 - $35 million to
construct a new hospital complex at another site - - and the
remaining $4 million due on bonds for the 2000 addition would
still need to be repaid.
Q: Why is an addition and remodeling being considered for the
therapy suite when it was built new in 2000?
A: Only in the past six months, we have been approached by
Affiliated Community Medical Centers (ACMC) to consolidate
physical therapy services in a joint venture at the hospital.
This provides an opportunity to reduce duplication of services
and to expand therapy services available in the community - -
but it will require additional space at the hospital. Also,
occupational therapy is a discipline now offered at the hospital
that was not offered when the therapy suite was designed and
built.
Q: If hospital reserves and revenue bonds can be used to fund
the remodeling projects, why will the Hospital Foundation also
sponsor fundraisers?
A: Donations, of course, will reduce the amount of financing or
reserves needed to complete the project. The community has not
had a major fund drive to support the hospital since at least
the mid 1960s. It is important for the hospital to have the type
of broad public support demonstrated by donations. Also,
donations will allow for enhancement of furnishings in the
remodeled areas.
Q: How many patient beds does the hospital have now and how
many will it have after remodeling?
A: The hospital is currently licensed for 40 beds, but can only
have 25 beds actually set up and available as a Critical Access
Hospital. After remodeling, the hospital will have 25 beds in
much larger patient rooms.
Q: Is that enough patient rooms, or maybe too many? What is the
average census?
A: The hospital has done extensive research on patient room
utilization over the past half dozen years, or so. This has
determined that the planned 25 beds should be just right. The
average midnight census is around nine patients. However,
throughout the day more rooms are utilized as patients come and
go. The highest recent midnight census has been around 20
patients.
Q: How long will it take to complete remodeling? What happens
to inpatient care during that process?
A: It is expected to take about a year and a half to complete
the remodeling projects. It will be done in phases, so inpatient
care will always be available during the work period.
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