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State owes top three medical providers $111 million

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Illinois

* Apart from the obvious here, Springfield could really use those construction jobs…

Springfield’s two largest hospitals are owed a total of $76 million for the care of state workers, retirees and dependents — a record amount that continues to grow during the state budget impasse and threatens to stifle growth in the local medical industry.

Memorial Medical Center, which is owed $46.3 million from the State Employees’ Group Health Insurance Program, is delaying plans to construct an $80 million medical office building for exclusive rental to doctors at Southern Illinois University School of Medicine because of the impasse, the leader of Memorial’s parent organization said Friday. […]

Springfield Clinic doesn’t plan to ask patients to pay more up front, either, said Mark Kuhn, chief administrative officer, though the clinic is owned about $35 million — a record amount — from the state employee insurance plan.

Much of that money gets recirculated through the local economy, so this is just nuts. And every dollar a local bank has to lend the providers to keep them afloat is a dollar they can’t lend to grow the economy.

Then again, if they’re owed this much money and are still humming along, perhaps it’s time to renegotiate?

posted by Rich Miller
Monday, Feb 8, 16 @ 8:41 am

Comments

So far Springfield Clinic has taken my co-payments and provided service. Someday that may change. It’s no doubt part of the formula of using people to apply pressure to the Democrats.

Comment by Mouthy Monday, Feb 8, 16 @ 8:59 am
Slow-pay or no-pay as a tactic to renegotiate previously agreed-upon contracts is a way of doing business among some in the private sector.

They are unethical and untrustworthy, and best avoided, if possible.

Comment by wordslinger Monday, Feb 8, 16 @ 9:00 am
The state pays 9% on overdue bills. For the big hospitals with no immediate cash shortage, this is a great way to hold cash. That is, as long as they think that the state will eventually pay them. This is a big IF, but so far nobody is talking about the state just defaulting on any of its debt, including overdue bills (except for pensions, of course).

Comment by Mostly Harmless Monday, Feb 8, 16 @ 9:03 am
>Then again, if they’re owed this much money and are still humming along, perhaps it’s time to renegotiate?

Because they shouldn’t be penalized for running their business in a financially stable manner.

Comment by Earnest Monday, Feb 8, 16 @ 9:12 am
The flipside of this is simple:

When will providers quit green-lighting care just for the heck of it? Even though the state’s payments are delayed, the payments for services rendered are guaranteed and negotiated. Every provider my wife, kids and I have seen in town since we got onto state insurance has never truly analyzed situations and scenarios and they just approve visits, medications and treatments/surgeries. Dentists are the worst. They have taken advantage of the state’s insurance system(s) for years and now they want restitution.

Comment by Team Sleep Monday, Feb 8, 16 @ 9:13 am
Yes, but stop and thi k about it a bit. State employees make up a good portion of the patients but the State as an employer locally isn’t as big as percentage as in the past. All 3 facilities are regional providers so their customers come from a wider area than the city and burbs.

The providers were already used to anywhere from 6 month to 14 month delay in payment just as business as usual from the State. You are only 8 months out from the end of FY15, so you are still within that “normal” window. The real problems will come a few months from now if FY16 doesn’t get resolved.

Comment by RNUG Monday, Feb 8, 16 @ 9:29 am
Three years ago, an insurance company employee told me to pay only my coinsurance because my big medical provider negotiated a high interest rate (9-1/2% in this case) for late payments by the State, to cover borrowing costs to continue operations. If this is true, does it vary for other service providers, like the two mentioned above, depending on their negotiating power?

There seems to be no transparency on what is going on, no way to confirm financial arrangements, or how much it hurts (or helps) providers.

Comment by peanut Monday, Feb 8, 16 @ 9:36 am
The state interest rate is set by statute. The relevant law for insurance reimbursements is the Prompt Payment Law, which establishes the 9% interest rate for late bills. There would be no need for a provider to go lower. I guess a provider could negotiate a higher interest rate, but I’ve never actually heard of it being done. In either case, 9% or 9.5% is a pretty good return.

Comment by Mostly Harmless Monday, Feb 8, 16 @ 9:45 am
What Wordslinger typed!

Comment by Slippin' Jimmy Monday, Feb 8, 16 @ 9:47 am
State Prompt Payment Act
http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=539&ChapterID=7

Comment by Ben Monday, Feb 8, 16 @ 9:51 am
RE:comment by
- Mostly Harmless - Monday, Feb 8, 16 @ 9:45 am:

==The state interest rate is set by statute. The relevant law for insurance reimbursements is the Prompt Payment Law, which establishes the 9% interest rate for late bills==

Thats good to know when your dentist begs for full payment! But it seems there may be a profit to be made through the difference between the mandated 9% interest rate and prime rate borrowing at 3.5%, at taxpayer expense!

I expect it’s difficult to borrow for hospital construction bonds when you have that much debt and big unpaid billings on your books, but financially it doesnt seem so bad.

Comment by peanut Monday, Feb 8, 16 @ 10:44 am
My quibble is with the guy who said that the employees and retirees don’t care. I care and a lot of people I know care. The problem is that there is not a lot pawns can do to change the situation. If Rauner is successful in killing the unions, there will be even less that can be done.

Comment by Norseman Monday, Feb 8, 16 @ 11:38 am
So this is how a business man runs state government. It is no wonder that 1.4% likes bankruptcy so much - run up the bills, file for bankruptcy, debts get canceled or severely reduced by negotiation.

Comment by Huh? Monday, Feb 8, 16 @ 12:22 pm
Since states can’t declare bankruptcy, running up the bills by not paying just adds to our deficit as now interest has to paid on the unpaid bills. If a business can hang on long enough and not borrow money or borrow at a low interest rate under the 9% that will be paid by the state, when they get payment they will make money on the deal. That is a far cry from good business sense for the state but helps to explain why some businesses are not yelling a lot about not being paid.

Comment by illinifan Monday, Feb 8, 16 @ 12:58 pm
At least with these NFPs, Rauner can’t say “Aloha,” if he tries to renegotiate, after he nearly burns them down. (Unlike the lawn job coming at some of the other NFPs.)

They are the only game in town, lucky for them.

File a complaint people. That’s how you get paid around these parts. /serious but snarky

Comment by cdog Monday, Feb 8, 16 @ 6:21 pm
The dentist I used to go to handled late payments from state insurance this way:
> I paid up front and got a 5% discount.
> Dentist refunded my money once he got paid.
> He kept the 5% discount he gave me.
> He kept the 9% interest.

By the way, I thought the late fee interest was 1% per month.

Comment by Late to the Party Tuesday, Feb 9, 16 @ 5:25 am
First 90 days are interest-free, after that 1% per month, so 9% for the year. And in theory it has to be paid in a year or less in order to come out of the same FY although some things do get pushed from one FY to the next.

Comment by RNUG Tuesday, Feb 9, 16 @ 8:23 am