Problematic hospital funding leads to layoffs, reconsiderations

Friday, January 24, 2014
Nicole Garner/Daily Mail Nevada Regional Medical Center is looking to trim operating costs and at the same time attract new patients.

Editors note: This is the first of several articles on NRMC's changes.

By Nicole Garner

Nevada Daily Mail

The Nevada Regional Medical Center is assessing its entire inner workings. Due to various financial struggles, the hospital is evaluating all of its operations, including staffing, offered services -- even where medical supplies are purchased from.

As of Thursday, the medical center's staff had been reduced by 11 percent, a number which includes layoffs, departmental transfers and empty positions that were eliminated instead of being filled.

Hospital CEO Judy Feuquay said that the moves hospital administrators are making aren't easy.

"This is very painful, and we want to do it in a carefully measured fashion. There will be cuts and likely some services will be reduced," she said.

The goal is to "right-size" the hospital's staff, maintaining the number of healthcare providers that accurately reflects the needs of the surrounding community. Right-sizing began at the start of January, and is expected to be finished by the end of February.

Feuquay said that layoffs were not taken lightly, and that several criteria were used to determine what positions would be removed. Employees were evaluated on work performance, departmental need and individual skill sets. Hospital employees who had multiple skill sets will be utilized as "floaters," staff members who will move between departments based on need.

Additionally, every department and service is currently being assessed for need and efficiency.

These reductions, layoffs and assessments stem from an issue that starts with federal reimbursement for delivered Medicaid and Medicare services, a crucial revenue stream for the hospital. Because of changes brought forth by the Affordable Care Act, the Nevada Regional Medical Center will be seeing a decrease in service reimbursement.

According to hospital data, 58 percent of the net revenue the hospital banked between July 2012 and July 2013 was from reimbursement for Medicare and Medicaid services. A report on the hospital's returning revenue shows that the medical center will lose nearly $8 million in reimbursement funds over the next six years.

Feuquay said that the problem with declining federal reimbursement has fueled the need to assess all hospital operations.

"Federal reimbursement is a key driver. Collections are down and the hospital budget is lower," she said.

Medical center administrators say that financial woes stem from three other places: government regulations, fewer incoming patients and the inability of many patients to pay. Together, those four problems have pushed medical center administrators to make countless cuts and reorganizations, many of which are still in the works.

Federal regulations mandate that hospitals report some information on patients, procedures and hospital operations. Feuquay said that the additional paperwork is necessary to receive federal assistance and reimbursement, but the additional work takes manpower and adds to payroll costs. And those additional costs are not covered by the federal government.

According to Feuquay and Judith Herstein, Director of Community Relations, Vernon County faces a problem seen in hospitals around the country. Due to a depressed economy, fewer patients are proactive about health issues until problems become overwhelming. Because of this, doctors and nurses see patients admitted through the hospital's emergency room -- the most costly option -- when illnesses are at their worst.

Feuquay said that the hospital treats individuals regardless of insurance or payment method -- what's called charity treatment. In fiscal year 2012, the hospital incurred $7.8 million in charity treatment or bad debt, bills the center will never receive payment for. The costs explain how frequently patients are unable to pay for the cost of medical treatment at the center.

"We're handling a population that has more health issues and needs, but also has a lower socioeconomic status," Feuquay said.

Since many patients in Vernon County are unable to pay for health services received, the hospital's income is frequently estimated for budgeting purposes, since precise funds cannot be determined. According to Feuquay, this creates a tighter budget for staff and administrators to work with.

While additional cuts and reorganizations are probable in the very near future, Feuquay said administrators are looking into alternative sources of income. Because Nevada Regional Medical Center is the closest option for pregnant mothers (Kansas City or Joplin) it's a choice hospital for obstetrics. The "Baby Faces" program, which provides 3D ultrasound images, gives the hospital additional income.

And, programs like the in-home health care are sources for additional revenue. Feuquay said that the hospital will be evaluating those programs to see how they can better serve patients and expand.

Herstein said that the medical center is ramping up its marketing and encouraging visitors to be proactive about health. She said that it's vital for the hospital to educate community members about the available resources.

Feuquay said that the hospital isn't leaving Vernon County, and that there are no plans to close or sell the facility. Although some things will be different, the hospital's future remains in Nevada.

"We're here to serve the community and intend to be here in the future," Feuquay said.

Further decisions on layoffs, cuts and modifications will take place at the Nevada Regional Medical Center board meeting on Tuesday, Jan. 28.

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