Bigfork Valley Hospital may increase tax levy to $1.5 million

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Community members gathered at Bigfork Valley Hospital on Wednesday evening to learn about why the board of directors is considering increasing the hospital tax levy from $836,220 to $1.5 million.

According to Board of Directors’ Chair Dr. George Rounds, the primary reason the levy is needed is because of “continued losses over the last ten years due to inadequate reimbursement by Medicare and Medicaid” combined with the “tightening of the reimbursement by private insurance companies.”

“Our nursing home also is in a situation where the Medicaid payments for our residents do not cover the costs of care we’ve had because of the ongoing losses which are increasing every year,” Rounds added. “We’ve had to cut services like home care. We eliminated two satellite clinics. We have removed our advertising marketing section. So yeah, because of the way the cost report is designed, critical access for hospitals that have an attached nursing home are all struggling.”

At the public meeting, the board stated the following inflationary impacts:

  • Our cost per FTE has increased by an average of 6.85% from 2018-2022 year over year. This averages to be around $815,000 per year.
  • Our contracted staffing costs have increased an average of 12.82% from 2018-2022 year over year. This averages to be around $26,700 per year.
  • Our medical supply costs have increased an average of 4.60% from 2018-2022 year over year. This averages to be around an annual increase of $184,000 per year.
  • The Bigfork Valley levy has been under annual inflation for many years. From 2010 to 2022, the taxpayers saved around $2,700,000, or an average of $213,000 annually.

Per loan covenants, the hospital’s annual debt service must not drop below 1.25. According to audited 2022 financial statements, the debt service ratio was 1.3 with a reported loss of $1.66 billion.

“If we continue to lose cash at that rate, we would be bankrupt in seven years,” said Rounds. “So we need to raise the levy. If we raise it to 1.5 million, that puts it at a zero margin. We don’t gain or lose any money, but we can continue to provide care and not cut services anymore with the current situation.”

The board describes the issue as one that is happening to rural hospitals nationwide. According to Dr. Rounds, one of the reasons the hospital is essential to Bigfork is for its emergency room.

“If the emergency room was not here, people have to travel another 40 minutes to another hospital. You have traffic accidents, logging accidents. I mean, heart attacks, all, you know, the full gamut of what terrible things can happen to people,” explained Rounds. “And those 40 minutes in all- you’re talking about the golden hour if you can get people to the hospital in that first 60 minutes. But if you don’t make it, their chance of surviving dramatically decreases.”

Members of the community asked about a merger instead of a tax levy. Dr. Rounds and other members of the board believe this should be avoided.

“In our last special meeting, we talked about looking into merging or selling or some other arrangement with other hospitals. But typically when you do that, if you look at a lot of the studies, services decrease, quality of care decreases. So if we can avoid that, we’d like to,” said Rounds. “I mean, I think the nursing home is vulnerable if we sell a hospital.”

Other questions from the community answered at the meeting included:

  • Where is this (Levy) money going?
  • Is this a permanent Levy increase or do they plan to drop it in the future?
  • What does the future hold for Big Fork Valley, with or/and without the Levy increase?
  • How much is the Nursing Home/Pharmacy/Hospital losing?
  • How do you plan on addressing the staffing issues?
  • How did the finance committee come up with the $1.5 million dollar levy and what is all this revenue going towards?
  • What has been done up to now to help change the direction of the finances?

The tax levy has been at $836,220 since the board voted to increase it in 2019. The reasoning behind that increase can be found at this link. The board will vote on Tuesday, September 5 to decide whether to increase the tax levy to $1.5 million.