Kalispell Regional scrutinized in federal probe

Kalispell Regional Healthcare informed staff Friday that the hospital system is under federal investigation by the Office of Inspector General of the U.S. Department of Health and Human Services and the U.S. Department of Justice over compensation for certain physicians.

In a memo sent to staff Friday afternoon, the hospital refuted any allegations of wrongdoing.

“We do not agree with the allegations and deny any wrongdoing. We have responded to the government’s requests for information and have cooperated fully with the investigation. We are hopeful for a quick resolution,” wrote Mellody Sharpton, Kalispell Regional’s director of communications and marketing.

Sharpton also confirmed that the health system was required to set aside $21.5 million in anticipation of a potential settlement regarding the investigation. That figure covers about two-thirds of the roughly $32 million deficit the hospital reported for fiscal 2017 in its final quarterly report.

According to Sharpton, the remainder of that loss resulted from a “change in methodology” in the accounting of bad debt that “impacted the deficit by nearly $10 million.” That change was a “one-time event,” she said.

Separately this month, the global credit ratings firm Standard & Poor’s downgraded Kalispell Regional Medical Center’s credit rating from “A-” to “BBB.” The rating change is not specifically in response to the $32 million deficit last quarter, but rather a comprehensive look at the hospital’s finances in 2017 and its projected ability to pay off debt in the future. S&P projected that Kalispell Regional’s outlook at the new rating remains “stable.”

In an interview with the Daily Inter Lake on Wednesday, Kalispell Regional Healthcare President and CEO Pamela Robertson acknowledged that January’s Medicaid reimbursement cuts and the impending completion of several large infrastructure projects — namely, the $40 million Montana Children’s Medical Center and the $12.9 million Digestive Health Institute — had “stressed the financial performance of the organization.” But she remained optimistic in Kalispell Regional’s investments and its ability to provide accessible, quality health care in the future.

“We have made significant investments, and those significant investments will pay a financial dividend in the future...we are optimistic about the future of Kalispell Regional Healthcare, and we are committed to continuing to serve the Flathead Valley and the communities outside the Valley that we currently serve,” she said.

She also expressed confidence in the hospital’s three-year financial plan, constantly under revision, to “ensure that we do weather our current financial [situation], and then put us in a very targeted margin to continue to be independent and locally governed. At the end of the day, that’s the goal.”

Friday’s staff memo reiterated Robertson’s positive outlook. “KRH is committed to promoting the health and well-being of the communities we serve, and our investment in talent, facilities and technology is a reflection of that commitment. Montanans deserve to have a high level of health care in their own communities, reducing the travel burden on families seeking specialty care.”

“KRH has provided exceptional care for more than 100 years to the people we serve and is committed to carrying on this tradition and supporting this community as a strong, independent health care system. We look forward to continuing our focus on providing high-quality, compassionate health care and improving the health, comfort and lives of our neighbors, families and friends.”