Hospital can't pay IRS, may face closure

DONIPHAN, MO (KAIT) -- Officials with the Ripley County Memorial Hospital Saturday met with state legislatures to discuss plans to pay $1.8 million to the Internal Revenue Service. Officials said the hospital started having problems with a repayment plan set up with the IRS in 1997 and severe economic decline in southeast Missouri has made it difficult to proceed with payments. Missouri State Representatives Jo Ann Emerson and Mike Dethrow, as well as State Senator Rob Mayer, discussed the problem at a public meeting with members of the hospital's Board of Trustees and other staff members Saturday.

According to documents presented at the meeting, the hospital is asking the state of Missouri to be on the receiving end of stimulus money obtained through the American Recovery and Reinvestment Act of 2009.

Bob Garrison, CEO, said Saturday that the hospital cannot sustain operation in its current state. The hospital's initial debt to the IRS was $736,034.68 with interest and penalties. Since 1995, the hospital has failed to pay the IRS in full. The hospital's current bill to the IRS includes $240,183.70 in penalties and $914,596.65 in interest, which accrues daily.

"It's just like a credit card bill. If you only pay the minimum due every month on a credit card, seems to be what the government is doing these days, the interest accumulates and accumulates and compounds and so, in this particular instance, a $700 thousand debt ends up being $2 million plus and none of that is accumulated interest because you didn't pay it in the first place," said Emerson. "It's an outrage that $700 thousand turns into $2 million."

Emerson said the meeting Saturday was aimed at obtaining information to make a sound decision about the hospital's future. Emerson said she hoped to keep the hospital open.

The hospital consists of 30 beds, 130 employees and an ER staffed at all hours of the day. The hospital typically treats 400 people per month for emergency reasons. Approximately 10 people reside in the hospital at any given time, depending on the time of the year.

"There's a lot of work to do. A lot of work to do with the Internal Revenue Service on the federal level, on the state with taxes and we just think that it's very important in a rural community like Doniphan to have access to health care and access to emergency health care and the opportunity to stay here in your community instead of having to go to Springfield or Poplar Bluff or anywhere else," said Emerson.

Fred Leroux, Chairman of the Board of Trustees, said the government needs to act swiftly to preserve health care coverage for people living in Doniphan and the surrounding area. If the government doesn't make a decision or the hospital cannot find more revenue or cut expenses, Leroux said the doors could be closed within 90 days.

"They have some good ideas. It depends on how quick they come through with them. I think they got woke up to what's actually going on," said Leroux. "We have cut back on payroll as much as we can to justify making ends meet."

According to Garrison, the hospital isn't only having problems with the IRS. Garrison said the hospital owes suppliers approximately $1.2 million.

According to a chart presented at the special meeting, the hospital's operating expense from September '08 to February '09 totaled $4,699,208.71. Income was at $3,364,324.11 in the same time period. Leroux said economic hardships in southeast Missouri have caused the $3 million deficit.

"I think it's been pretty tight. It's just the economy does that. The economy in the past 2 years, everybody, especially in the last half year on the economy," said Leroux. "People hasn't got any money and that's where most of our money comes from is state and federal money and private people, insurance and things like that. When that money slows down, that's what creates the cash flow."

All 3 state representatives have promised to look into information presented to them. Emerson said she'll meet again with the IRS to discuss the possibility of waving some penalties. She said the IRS would not forgive the original $700 thousand or compounding interest.

"Myself and Representative Dethrow will work with the Department of Revenue and also the Department of Economic Development and also search other agencies and other funding services to see if the state of Missouri can lend some assistance to the hospital here at Doniphan," said Mayer.

"We understand that this is a very important rural healthcare issue and we want this hospital to survive," said Dethrow.

One possibility discussed to raise the hospital's general revenue was to change it's designation to a critical access hospital. Critical access hospitals are classified as hospitals that are more difficult to get to because of the transportation grid. If a hospital is easier to get to, then they can't receive that designation. By getting that designation, RCMH would be able to get more money for each hospital visit from Medicare. According to Medicare, Highway 160 is a major highway, but it's in poor condition, according to those at the meeting.

"We want to look at a possibility to see if we can make this a critical access hospital. Some folks here in the focus group think that may help so we're going to look into that," said Dethrow. "The critical access designation will help them with better reimbursement rates and actually get more money per service so the federal government so that'll be a very positive thing for them."

Other possibilities for preserving the hospital's future included a 1-cent sales tax to be voted on by Ripley County residents and establishing a foundation of some sort where donations can be made by patrons.

The hospital is currently funded by money raised via property and real estate taxes.

"Once we get to the bottom of how the original penalty existed, because so much of the money that's owed to the IRS is actually interest and penalties and not principal, and so if we can whittle it down to the original, I don't think the IRS generally likes to do that, but it's worth a try," said Emerson. "It's a lot easier to pay $700 thousand than $2 million. We've just got to figure out and that $2 million is more than this hospital can possibly pay because they will never then get flush and have a balanced budget."

The closest hospitals to Doniphan are the Poplar Bluff Regional Medical Center in Poplar Bluff and Arkansas Methodist Medical Center in Corning, AR. Emerson said that's a relatively short drive, but not in cases of medical emergency.

"There's a lot of tourism here in Doniphan. It's critical to have an emergency room and the ability to get immediate healthcare and the drive, even though it's not too far to Poplar Bluff, it's still too long in an emergency situation," said Emerson.

"It'd be a horrible, horrible thing for this community and this region because the hospital employs many people," said Mayer.

"We know when we have critical health issues. We know that time is absolutely important and that 1st hour is critically important," said Dethrow.

Personal Impact

Dennis Smith has lived in Doniphan since the 1960s and he said living without a hospital would be devastating for the community. He said the hospital saved his life in 1993 when he had an aneurism. The hospital was able to piece him together and keep him alive until he was transported to Barnes in St. Louis.

"If it had not been for this hospital in being the first line of defense, I would not have lived," said Smith. "They patched me back up and got me, they weren't quite sure what was wrong with me, they just knew it was serious but they kept me alive until I could get to Barnes where they did surgery on me for 11 hours."

Smith said Ripley County has some of the best doctors in the state, even though the county is ranked in the top 5 financially drained counties.

Smith said if there wasn't a hospital in Doniphan, then other people could die in the future.

"We are, at best, 30-35 minutes from any other kind of medical facility and our hospital here takes the place of an ambulance ride because sometimes that 30-minute ambulance ride is all the difference in life and death," said Smith.

"It would be devastating. It would be devastating," said Smith. "There's been people like me in the past and there will be people in years to come that need this hospital. they need this first line of defense to stabilize people until they can get them."

Economic Impact

Jerry Cole, a member of the Board of Trustees, set up a focus group to study the economic problem and come up with any solutions the hospital could look into. Cole said allowing the hospital to collapse would be detrimental to the already struggling economy of southeast Missouri.

"Because of the revenue that's generated through the hospital, there'd be a ripple effect on this economy in Doniphan," said Cole.

Cole said more than 130 employees work at the hospital and would have to move in order to continue working in the medical profession. He also said elderly residents may leave for a town with medical services.

"We have a county that's primarily made up of retired people and they would have to drive 30 miles to see a physician," said Cole.

"Our hospital here is extremely important to the industry of the town because it gives us a basis, to our schools here because it gives us protection and to our citizens because there are about 12-14 thousand people in the county, and we don't realize how much it means to us," said Smith.