Centegra moving inpatient care to hospitals in McHenry, Huntley
Beginning in August, Centegra Health System is moving all acute inpatient care from Woodstock to hospitals in McHenry and Huntley.
Centegra CEO Michael Eesley said Thursday this repurposing of hospital beds was prompted by "a flattening of growth in the Woodstock market over the last couple of years."
Eesley said the health care industry is evolving more toward outpatient care rather than inpatient treatment.
"We are trying to change our health system to meet the requirements of the environment," he added.
The move comes after the Crystal Lake-based health system has lost roughly $40 million this fiscal year since opening its $233 million, 128-bed Centegra Hospital-Huntley last August.
Eesley attributes part of those losses to the Huntley hospital - anticipated to be roughly $10 million to $12 million.
"We anticipated the first year of Huntley that we would have some type of loss," said Eesley, adding the nine-month-old hospital might take a couple more years to show growth.
Multiple variables, such as population declines and higher numbers of Medicaid/Medicare patients - up from roughly 5 percent more than 10 years ago to about 14 percent - have contributed to the system's losses.
"The increase in bad debt we have seen that we didn't anticipate is over $14 million," Eesley said.
Medicare/Medicaid reimbursements cover less than the cost of services, which resulted in a $16 million loss. Patients insured through the Affordable Care Act exchange also aren't paying their bills due to higher deductibles, he added.
Money crunch
Throughout Illinois, hospitals are facing a financial crunch due to changing reimbursements and other pressures. It's compounded by the state's fiscal crisis - now in its second year without a budget. Payments to hospitals are part of the state's more than $15 billion in overdue bills.
Downers Grove-based Advocate Health Care - Illinois' largest health network with 12 hospitals - is making $200 million in cuts to offset mounting debt from unpaid patient bills.
Patient volumes at the Huntley hospital, and throughout Centegra's system, have "flattened out," which Eesley said came as a surprise.
Four medical-surgical beds at the Huntley hospital will be converted into an intensive care unit, and inpatient rehabilitation services will be moved from Centegra's McHenry campus to Woodstock, while those beds will be converted for medical-surgical and ICU use. Some of these changes will require state approval.
More growth
Centegra justified the need for a hospital in Huntley based on future population growth in the Northwest suburbs, which hasn't materialized as Illinois as a whole is losing residents.
In 2012, Advocate and Mercyhealth systems' unsuccessfully jointly sued the state board and Centegra attempting to block construction of the Huntley hospital. Now, they are expanding and opening new facilities of their own.
Advocate is opening an outpatient center north of Interstate 90 and Route 47 in Huntley later this summer. It also is injecting $450 million to improve two nearby hospitals.
Wisconsin-based Mercyhealth this week received the Illinois Health Facilities and Services Review Board's blessing to build a 13-bed mini hospital in Crystal Lake for $79.5 million at the corner of Three Oaks Road and Route 31. It operates three hospitals - one in Harvard, Illinois, and two in Wisconsin.
Eesley said Advocate building more ambulatory services is "just normal competition," but added, the state board's decision to allow Mercyhealth's hospital is surprising considering the decline in use of inpatient beds.
Centegra's system could be bolstered by an anticipated merger with Northwestern Medicine, expected to happen later this year.
"It's an awesome opportunity to offer even better services to people in our communities," Eesley said.