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County sticks with SCHA ... for now

The Wadena County Board allowed an April 30 deadline for exiting South Country Health Alliance to pass with only one commissioner wanting to pull out of the county-based purchaser of health care services.

Commissioner Rodney Bounds, who made a motion to withdraw from SCHA at a special meeting Thursday, said he didn't see a future for the organization.

No commissioners seconded the motion, although the rest of the board also did not express much confidence in the long-term viability of SCHA.

More recognizable health care programs such as Blue Plus, Medica and UCare are allowed to compete with it in 2012 for county citizens who are on public medical programs. Right now, SCHA is the sole provider for those individuals.

The commissioners expressed a desire to lessen the county's loss and maximize its return by remaining in SCHA for right now.

The financial projections do look good for SCHA, said Bill Stearns, chairman of the county board and vice chairman of the SCHA joint powers board.

"In my opinion, it's totally unfortunate this year wasn't last year," Stearns said.

It's easier to accept one down year rather than two, he said.

A number of factors have helped improve SCHA's financial condition.

SCHA has decreased by 5 percent what it pays providers of health care services, such as Tri-County Hospital, Stearns said. SCHA's risk scores are up. And the Minnesota Department of Human Services capitation revenue has increased.

Paul Sailer, the county's human services director, said SCHA also is no longer paying for General Assistance Medical Care after the program ended March 31. SCHA expects that to save them around $1 million, he said.

These are some of the reasons why the SCHA finance committee believes this year will be profitable, Stearns said. The loss of three of SCHA's 14 member counties does have an effect, however.

Cass, Crow Wing and Freeborn counties are exiting. The SCHA joint powers board will meet May 6 to discuss the future of the organization. The board passed a motion instructing Commissioner Dave Schermerhorn, its representative at that meeting, to vote in favor of dissolving SCHA if that motion is presented. Counties that left SCHA are not allowed a vote on that issue. Commissioners also instructed Sailer to write a letter for them to sign expressing their lack of confidence in SCHA's leadership.

Sailer gave an overview of why the county joined SCHA in 2007 and the current financial situation.

Wadena County became interested in county-based purchasing 12 years ago, he said.

"We really felt that the county knew the clients best, knew providers best and that the health plans were generating good profits," Sailer said. "If that could be handled locally those profits could be turned inward to help our local providers and to provide unique programs for the clients that we serve."

SCHA did have good numbers when the county joined, he said. But when SCHA had serious financial problems in 2008 followed by a continuation of those problems to a lesser degree in 2009, that raised the whole issue of risk.

"There did not appear to be serious risk at the beginning of this because the gain was evident and it had been for a number of years," he said about SCHA.

But with the problems of 2008-09 and the county having to put some of its own cash into SCHA, it became a concern, he said.

If the projections are correct and SCHA has turned a corner financially, then in a couple of years it might be able to increase payment rates to providers. The county could also have additional cash available to improve the health of local citizens, Sailer said. But there are still some issues out there, with one being the introduction of competition in 2012.

"If that stays on schedule then we're competing with a number of other better known health plans," Sailer said.

Right now, estimates indicate that Wadena County's share of SCHA assets is just under $400,000, he said. It's possible those assets could increase in 2010 and 2011, leaving the county more to cash out if it wants to exit in 2012.

Bounds asked if people on SCHA programs would notice if the county left the organization.

Sailer said that in a rural area health plans all contract with the same providers so their networks look a lot alike.

"I think that's one of the pluses, Rodney," he said. "The client doesn't really notice the difference from one plan to the other."

Bounds asked Sailer the negatives of staying in SCHA.

Sailer said one negative, which he isn't at liberty to give any details about because it was discussed in closed meeting, involves the perception of SCHA organization by some of the counties exiting.

Stearns said the cost to shut down the organization is also disconcerting. If the remaining counties decide to dissolve SCHA they will be responsible for paying unemployment benefits.

Schermerhorn said the counties were assured at a financial meeting that SCHA had that covered.

Stearns said he thought they were just talking about general money in the balance.

Commissioner Lane Waldahl said the board's decision about whether to leave or stay is like playing the stock market.

"Do we stay with it and hope we get some type of return on it or do we bail out with what we've lost now," he said.

Sailer said the county put approximately $1.2 million into SCHA between its original membership Jan. 1, 2007 and the cash call in 2008. It gained back about $200,000 in 2007 and its share of the assets is currently valued at about $400,000.

The April 30 deadline wasn't the only opportunity this year the county had to exit from SCHA on its own. Counties can exit Dec. 31 of any year, Wadena County Auditor and Treasurer Char West said.