Software glitch produces cash crunch at hospital

Problems with software at Benewah Community Hospital are causing billing issues.

Benewah Community Hospital faces a cash shortage after problems with new software caused a myriad of billing problems. The county commissioners said they will loan the hospital money until the software is fixed.

“We are going to do what is necessary to help the hospital,” Jack Buell, chairman of the county commission, said.

The hospital, which is owned by the county, converted to the software in February. Problems with billing are largely tied to Medicare and surfaced shortly after the change.

“Our billing department is doing a fantastic job under some difficult circumstances,” Dan Hammes, chairman of the hospital board, said. “They are working closely with the vendor to rectify issues as they arise.”

The software is sold by Cerner Corporation, which is based in Kansas City. The company provides software services to hundreds of hospitals throughout the United States and has about $5 billion in annual sales.

The hospital has worked with Cerner over the last 15 months in preparation for the changeover. Problems surfaced in the final weeks when issues with an update in Kansas City prevented proper testing of the billing functions of the software.

“Because of the lag between providing services and issuing bills, we did not encounter the problem for about a week after we went live,” Mr. Hammes said. “While Cerner has been supportive, we have made it quite clear how critical the situation is.”

Benewah Community Hospital has about $27 million a year in gross revenue with more than half of that billed to Medicare. While billing to private insurers functions properly, most bills for Medicare patients cannot be sent because of software glitches. It takes about 21 days after bills are transmitted to Medicare for the hospital to receive payment.

“We’ve used our cash reserves to operate for the past several weeks but sometime late next week we will be low on cash,” Mr. Hammes said. “Our cash flow will return to normal some three weeks after the software is fully operational, but in meantime we will need a source of cash to operate.”

This week Cerner dispatched a technician to St. Maries in an effort to expedite repairs to the system.

The hospital spends about $200,000 per week.

Mr. Buell said the county will investigate securing a line of credit for the hospital.

“We will look at our options and we will keep our hospital operating,” Mr. Buell said.

The federal government pushed hospitals to convert from paper medical records to electronic record-keeping, that includes billing, during Obama's first term. 

Prior to the change, Benewah Community Hospital used a system provided through Kootenai Health. About two years ago, the Coeur d’Alene hospital started plans to change software vendors.

Because of differences in how a small hospital bills compared to a large facility like Kootenai Health, Benewah Community Hospital opted for a different vendor; Cerner.

“The company has a good reputation. In fact, the Grangeville hospital has used their software for years and they are quite satisifed,” Mr. Hammes said. “The good reports we received combined with the lower cost convinced us to go with Cerner.”

Cerner reports that it has 27,000 clients in 35 countries worldwide. In addition, the company recently signed a multi-million dollar contract with the Veterans’ Administration.

Although the company boasts thousands of satisfied clients, and grew revenue by some 7% last year, this is not the first time there has been billing issues with Cerner software.

Agnesian Healthcare, a hospital in Wisconsin with $466.2 million in annual revenue, is suing Cerner over problems it had with billing. The company seeks $16 million in damages.

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