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KEOKUK, IOWA -- UPDATED: April 19 at 9:30 p.m.

Thursday night the Keokuk City Council approved a request for 100 thousand dollars to help Keokuk Area Hospital.

A new law lets Iowa hospitals get contributions from city and county governments - and the state - to leverage *federal* funds.

The hospital is now waiting for the state and federal government to approve an amendment to that plan.

That approval likely will not come before next January.

But the money will be retroactive and can be used to pay for services administered this year.

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The Keokuk Area Hospital serves patients from the Tri-state area.

But a recent report shows that 75% of the patients are either covered by Medicare or Medicaid or are classified as indigent.

That rolls into a reimbursement problem for the hospital, because they only get reimbursed 76% of the cost that it takes to care for those patients.

So the hospital needed a lifeline to stem the financial bleeding and that came in the form of a new law passed and signed at the Iowa statehouse

"A couple of hundred thousand dollars from the city and the county local governments will turn into about $512,000 which will certainly help to take care of the indigent, Medicaid and elderly patients that we see," said Keokuk Area Hospital CEO Wally Winkler.

The total budget for the hospital is about $28 million dollars. But Winkler says last year, they provided about $6.8 million in uncompensated care to patients who came through the door. And by being able to recoup some of that money through private insurance payments, the hospital actually lost about $1.4 million.

It's not a total fix, but it certainly helps and as we go forward with reform and our efforts to reduce costs and do everything we can to conserve funds. It will be a big help for the hospital," said Winkler.

Winkler said he thinks there will be more reform for hospitals across the U-S in the coming years and that what hospitals look like today won't be what they look like four or five years from now. He just hopes that his facility will be able to continue its mission of serving the people of the tri state area.

Winkler also said that once the hospital and state are able to leverage the federal funds, it will take at least nine months to a year before the hospital actually sees the dollars in its bank account.