A West Virginia lawyer is fighting a 9% state-approved rate increase for Charleston (W.Va.) Area Medical Center, saying the hospital has a history of financial mismanagement, including an unprofitable HMO.
Richard Lindsay, a Charleston lawyer who is also a medical doctor, has asked the West Virginia Health Care Authority to reconsider its decision to approve the increase. Lindsay claims the hospital created its own financial problems by selling its HMO, Carelink, for 42% below market value. Carelink was sold to Coventry Health Care, Bethesda, Md., for $8 million in 1999.
"CAMC made a bad investment," Lindsay said. "It fell flat on its face, and consumers are paying for it."
Lindsay also disputed the amount the hospital claims to be losing on medicated stents used to open blocked arteries. The devices are not fully reimbursed by Medicare.
Authority Chairwoman Sonia Chambers said the board would stand by the 9% increase, which was approved after the board rejected the hospital's request of 12%. The rate boost took effect in late January. State law grants the authority power to set rates for all acute-care hospitals in the state. In fiscal 2003, the authority approved rate increases averaging 4.25%, Chambers said.
Chambers said the board considered the financial difficulties stemming from Carelink and increases in malpractice premiums. The hospital had a $23 million loss last year on revenue of $810 million, partly because of a $17 million charge to refinance bonds.
She said the board recommended that hospital executives adjust their business operations. "We made it clear to them we were very concerned about their financial position," Chambers said. "We also made it clear that they probably could not expect such a large increase in the future."
Hospital spokesman Andy Wessels said the increase was needed to compensate the hospital for treating most of the state's Medicaid patients. The hospital lost $18 million on Medicaid in 2002.
"We felt we were really justified in the 12% we applied for," Wessels said.
The authority also approved a 9% rate increase for 155-bed City Hospital in Martinsburg, which originally had requested a 15.5% increase after its fifth consecutive year of operating losses. Hospital officials expect to cut 45 jobs to help eliminate $3.2 million from the total budget this year. With the cuts, the hospital should break even, officials said.
Lindsay said if the authority does not reconsider the increase, he will appeal.