The reimbursement blues. A psychiatric hospital copes with decreasing reimbursement and declining admissions

Beginning in 1989, Harbor View Mercy Hospital, a freestanding psychiatric facility in Fort Smith, AR, saw a flattening of growth in inpatient days and declines in discharges. In addition to decreasing admissions, it faces the problems of decreasing reimbursement, the need to provide more services with fewer resources, and greater government regulations. The greatest problem is inadequate reimbursement. Psychiatric hospitals fare worse than their acute care counterparts under both Medicaid and Medicare. To fulfill its mission to serve those in need, Harbor View has allocated 43 percent of its revenue budget this year to cover charity care, bad debt, etc. Ron Summerhill, the hospital's chief administrative officer, predicts a slowdown in the growth and profitability of psychiatric services in both the for-profit and not-for-profit sectors. But he is combating this trend by increasing use of managed care arrangements, diversifying, offering more outpatient services, and advocating for change in the reimbursement situation.