Hospital board takes drastic measures to keep hospital afloat
The board of directors met in a special-called meeting Thursday evening, Dec. 2, to discuss several management initiatives, as well as to discuss Restorations Healthcare Management’s action giving 90 days notice of their decision to pull out of its contract with CCH only a little over a year into their management agreement.
The board met with all members present except one, who was out due to maternity leave. Several county commissioners were in attendance as well as employees and concerned citizens.
Concerns about the organization’s finances have plagued the board for several months, and the first action taken during the meeting was to approve an emergency loan of $500,000 from Commercial Bank, secured by accounts receivable. The loan was necessary for operating expenses, including the payroll on Friday, Dec. 3.
“We’re willing to do whatever it takes to help the hospital out,” said Mike Robertson, representative for Commercial Bank.
“Is it safe to say we need this money and need it quickly,” asked board member Rob Asbury, to which CFO Tracee McFarland answered, “Yes.”
County Mayor Jack Daniels addressed the audience, saying, “We’re doing everything we can… We don’t want everybody scared to death about your job.”
Administrator Tim Brown explained that the hospital has a constant issue trying to match expenses and declining volumes. He said it is a struggle to maintain that balance, since there has been a dramatic decrease in revenue.
“How much of that can be attributed to the loss of physicians,” asked board member Terry England.
Steve Clapp, President and CEO of Restoration, answered that the decrease cannot be attributed to one specific issue.
Brown introduced a suggestion to request proposals to sell or enter into a joint venture with someone concerning the Home Health agency. There are currently 52 employees there, and according to Brown it is losing $250,000 - $300,000 a year.
Home Health director Glenda Duffield spoke emotionally to the board, explaining how hard the employees have worked and stating that the payor mix is mainly to blame for the declining revenue. Many of the patients seen by Home Health are on TennCare, and therefore the agency doesn’t get paid as much as they would by other insurance carriers. She added that the agency doesn’t get the referrals it needs from local physicians.
By law, patients have a choice when deciding what home health agency to use; however, most will use the one recommended by their physician.
“The viability [of home health] is based upon how well it’s utilized by physicians,” said Dr. Michael Weiting. “We don’t have enough doctors to meet the needs. I’m already booked into February, and I shouldn’t be booked that far ahead.”
After further discussion about the utilization of the agency by local physicians, Brown stated, “We’re to the point we’re going to have to borrow to keep these things afloat.”
“Our overhead is too great,” stated Dr. Richard Clark from the audience. “Everybody knows that’s going to have to be dealt with.”
“I’d hate to see this county splinter this stuff off,” said board member Bill Debusk. “This could change in a year or two.”
“If we can keep Home Health we need to do that,” added Daniels. “But we do what we have to do to survive.”
In another cost-saving measure, the board voted to close the in-patient rehabilitation unit, which only opened up in July of this year. The unit is only averaging a patient a day, said Julie Russell, director of the unit.
“It has been too hard to get patients who qualify for the service,” she explained.
There are 14 people who staff the unit, and many of those are being used in other places within the hospital or nursing home.
In a refrain echoing the discussion about home health, Russell also stated that the unit wasn’t getting enough referrals from physicians.
“There are not enough physicians,” she said.
The vote was unanimous to close the unit.
Another round of staff reductions are to take place as well, after the board voted to accept the suggestion from Restoration to reduce the staff by the equivalent of 15 or more full-time employees. This could be through reduction in hours, conversion of staff from full time to part time, productivity and consolidation of positions.
In another cost-saving measure, the board agreed to enter into hospitalist coverage agreement with local primary care physicians. Local primary physicans have agreed to cover unassigned inpatients for $400 per day. This alternative is much cheaper than a full-time hospitalist program, according to Brown.
The board also voted to hire a consultant on a temporary basis who is an expert in receivables.
Discussion then turned to the management agreement with Restoration, which turned in their 90-day notice on Nov. 24.
“My concern is the structure we’re working in and getting things done,” said Brown, adding that he was frustrated at “my inability to know if I can meet payroll.”
Clapp told the board that Restoration had stepped in during the last request for proposal (RFP) process because “you needed help, you wanted Tim [Brown] back, and we wanted to be here.”
Brown, who is now with Restoration, served as chief financial officer and later administrator for the facility under Baptist Healthcare System.
Clapp added that the process for getting things done is currently too long, especially in emergency situations such as the recent one requiring an emergency loan. Restoration was required to go before the
“It’s a structural issue, the way it’s set up,” he said, “but it’s not the way to do business.”
County attorney Jimmy Estep told the board that there are different avenues that can be explored to restructure the way the hospital does business.
Clapp told the board that in the past few years, 23 percent of rural hospitals have closed across the country.
“The community has to decide – ‘Do we want to have a hospital long-term’,” he said.
Daniels threw the possibility of leasing the hospital to another organization on the table, saying he had talked with Dr. Carroll Rose, who made that suggestion.
The board members agreed that more than one physician should have input on the decision.
Because of the actions taken by the board to reduce costs, Restoration offered to extend their notice of termination of the management contract for three weeks, until the next board meeting on Tuesday, Dec. 21, at 6 p.m. in the conference room of the hospital