Routt County’s annual personnel costs exceed annual property tax collections, health costs an issue
May 2, 2017
Steamboat Springs — Confronted with the reality that annual personnel costs are exceeding annual property tax collections, Routt County is seeking relief from the high cost of medical benefits.
"Our property tax collections are typically $18 to 20 million (a year), and for years, our personnel costs have been right at that,” County Commissioner Cari Hermacinski said May 2. “Now, for the first time, our overall personnel costs are higher than what we collect in property taxes."
Routt is self insured, and County Manager Tom Sullivan confirmed Tuesday the yearly cost to provide medical benefits to county employees is about $3.64 million. The Board of Commissioners is seeking to reduce that number with a strategy that could incentivize employees considering elective medical procedures to go outside the Yampa Valley for treatment at lower cost.
Based on a model adopted by Eagle County, Routt County is considering retaining a consultant to help employees compare a quote from Yampa Valley Medical Center in Steamboat Springs with quotes for the same procedure from hospitals in the region. If the employee opted to have a procedure done at lower cost elsewhere, the county and the employee would share the savings.
The Board of Commissioners previously reached out to Yampa Valley Medical Center 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, met with the commissioners Tuesday to talk about the hospital’s own fiscal challenges, and how YVMC’s anticipated merger with UC Health influences their outlook.
"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 wide range of services, including a robust emergency room operation but also a signficant patient population on Medicare and Medicaid, YVMC has tighter margins than some other 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 "75 percent is a pretty good reimbursement," 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 at YVMC would be after the merger, and after municipalities and school districts in the area are consulted.
"We need other partners, the 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 behaviors that address the factors that lead to the greatest numbers of health issues — like exercise, avoidance of smoking, a regular diet of fruits and vegetables, adherence to wearing seat belts and reaching a target body mass index.
"What drives health is healthy behavior," he said.