Capital improvements, bad debt and the battle to keep up with operating costs are causing hospitals in the oil patch to turn to sales tax to help fund their facilities.
The cities of Tioga, Stanley and Crosby are asking voters on Nov. 6 whether they want to impose new sales taxes to support their local hospitals.
A proposed half percent sales tax for Mountrail County Medical Center in Stanley would increase the city tax to 1.5 percent and generate about $380,000 a year for the hospital.
"The majority of this will be used for operating expenses," said Doris Brown, hospital administrator. Based on the hospital's current financial needs, she added, "It would not be enough but it certainly would go a long ways."
Some money could go to equipment and other improvements. The administration would like to increase the size of its clinic and expand its emergency area, which currently has only one patient room.
Brown said the hospital is working to improve its financial position in addition to seeking sales tax. The medical center is remodeling to create space to install a CT scanner, replacing a once-a-week mobile scanner with the ability to provide anytime service. That will avoid the need to send patients to Minot, generating more revenue for the local hospital while saving patients the time and expense of road time.
The hospital is moving to outsource some of its business office functions to improve cash collections in its accounts receivable. Brown said the business office has been unable to fill its staff needs, causing the hospital to fall behind in collections.
Mountrail Bethel Home, which is adjacent to the hospital, and Trinity Health in Minot jointly own the hospital facility. To keep the hospital going over the past several years, the nursing home donated $1.6 million and Trinity wrote off $600,000 in debt.
The hospital has been able to curb rising expenses in the past year but expenses remain above revenue despite increases in that area, according to hospital data.
Issues facing the hospitals in the oil patch include difficulty competing in wages, lack of affordable housing for employees and a substantial increase in patients who don't pay their bills.
Bad debt has been the tipping point for St. Luke's Hospital in Crosby, administrator Les Urvand said.
"We have increased our bad debt quite a bit because we have the obligation to take care of anybody who comes to our emergency room, whether they have money or not," he said.
Emergency room visits have increased from about one a day to 800 last year. St. Luke's is projecting nearly 1,200 visits this year.
The hospital cannot continue to sink further into the red, Urvand said.
"We need some help, one way or another," he said.
Tioga Medical Center is looking at a half percent sales tax to generate about $500,000 year for a new clinic and larger emergency room.
"Our community is growing and we need to build a new clinic to accommodate the population growth," administrator Randall Pederson said.
The plan is to build the new clinic onto the hospital for the ease of doctors who now must travel between the two facilities.
"We just need to make it more convenient for them to provide care," Pederson said. "It's just not efficient to have a separate building where the doctors have to get in their cars and drive to the hospital every time there's an emergency-room patient."
That travel distance has become important with the tripling of emergency room visits from about 600 about five years ago to more than 2,000 today.
As the hospital looks to recruit more physicians, modern, efficient facilities will be an added draw, Pederson said.
The medical center plans to apply for a federal low-interest loan if feasibility studies and the sales tax get the green light. Without the sales tax, the hospital will not have the funding to pay for the project, Pederson said. Even with patient increases in some areas, the hospital doesn't generate the extra revenue to support capital improvements, he said.
The sales tax has no sunset, but Pederson said the hospital board intends to have the tax discontinued if it becomes no longer needed.
If the area hospital measures pass, the communities would not be the first to fund health care in this way. Park River, Grafton and Bowman already levy sales tax for their local hospitals.