Routt County’s personnel costs exceed annual property tax collections
Health costs hit home
May 2, 2017
Steamboat Springs — Confronted with the reality that its total annual personnel costs exceed annual property tax collections, and health benefits are a factor, Routt County is pursuing the possibility of incentivizing its workers to have elective medical procedures done at hospitals outside the valley, if the cost is significantly lower.
"Our property tax collections are being outstripped by healthcare costs," County Commissioner Cari Hermacinski said May 2. "We need to start looking at a way," to address that. "Our property tax collections are typically $18-20 million (a year), and for years, our personnel costs have been right at that. Now, for the first time, our overall personnel costs are higher than what we collect in property taxes."
County Manager Tom Sullivan confirmed that the county's annual cost to provide medical benefits to its employees is about $3.64 million.
Based on a model undertaken by Eagle County, the county is considering retaining a consultant to help employees compare a quote from Yampa Valley Medical Center with quotes for the same procedure from hospitals in the region. If the employee opted to have a procedure done at lower cost in another community, the county and the employee would split the difference.
The Board of Commissioners had previously reached out to Yampa Valley CEO Frank May inquiring if the local hospital would entertain negotiating lower costs for county employees. And while the two parties have been in touch by e-mail, May 2 was the first time they sat down together to talk it over.
May and Rich Lowe, chairman of YVMC's Board of Trustees, sat down with the commissioners Tuesday to talk about their own fiscal challenges, and how their anticipated merger with UC Health, by October, influences their outlook.
Recommended Stories For You
"It's not my intention for this to be a threat, but an incentive to stay with our local facility," Commissioner Doug Monger told May and Lowe. "If you guys, can lower prices, employees might stay in the valley. We don't want to hurt a major employer, but at the same time, we're self-insured and we have a fiduciary responsibility."
May told the commissioners that as a relatively small hospital with a high range of services, including a robust emergency room operation, but also a large patient population on Medicare and Medicaid, YVMC has tighter margins than some facilities.
"Our total net billing is about $130 million but we collect under $100 million because of Medicare and Medicaid," May said.
Hermacinski observed that, "Seventy-five percent reimbursement is pretty good," and May responded, "Yeah, but we're at 67."
The hospital is also concerned with the Colorado legislature's struggles this session with funding an additional $105 million in Medicaid, which would go toward healthcare for low-income patients.
Lowe suggested that a better time to discuss lower charges for government workers in YVMC would be after the merger, and after municipalities and school districts are consulted.
"We need other partners, schools and the city," Lowe said. "We can walk in here today and say, 'the price is 10 percent less,, but that's not the answer. That's not treating the cause."
Over the long term, Lowe said, the surest way to statistically reduce the charges incurred by a pool of employees is to encourage health behaviors among individuals to address the factors that lead to the greatest numbers of health issues: exercise, avoidance of smoking, a regular diet of bruits and vegetables, adherence to wearing seatbelts and reaching a target body mass index.
"What drives health, is healthy behavior," he said.