Hospital plan for profitability

The regular monthly meeting of the Nevada Regional Medical Center’s board of directors occurred on Tuesday evening while on Monday afternoon, Wes Braman, interim chief executive officer, took time to look back and ahead as the first anniversary of Freeman Health System’s management of NRMC is but a few days away.

The review looked at the initial top-to-bottom review of the hospital, adjustments made, current challenges and opportunities as well as the year-end closure of Mercy Hospital, Fort Scott.

Prior to the board meeting, Interim Chief Financial Officer, Mike Leone said “One of the things I’m going to present tonight is a plan that shows where we go from a loss to a profit situation.”

While the details were reviewed by the board in closed session, Leone provided a general outline.

The end of the year closure of Mercy Hospital, Ft. Scott permits NRMC on Jan. 2 to file with the Centers for Medicare and Medicaid Services for classification as “Sole Community Hospital.”

According to a handout provided by Leone which was based off of an email by the hospital’s auditor (BKD of Springfield) the estimated 12-month benefit to NRMC would be $829,539. While it is supposed to take 90-days for a determination he said it would be more realistic to have this new status by July 1, 2019.

The second comes from a review of hospital services to see which ones could result in a trimming of staff while not cutting important services.

“Right now we’re pretty lean,” said Braman in Monday’s interview where he referenced the merging of the nursing pool in the intensive care unit with those on the medical-surgical floor which lowered the required amount of nursing staff without reducing services.

“But again, while we have things in mind, the object of any change is to strengthen our cash position and not harm us on the revenue side; we have to provide the services people here most need,” said Braman.

The third and fourth items outlined by Leone are already part of the budget and hence part of the plans for the hospital.

“The third is to hire a general surgeon and the fourth is to increase the census in our behavioral health unit,” said Leone. “Now we just need to execute on each of these and they will help us in the most critical area of all, increasing our volumes.”

In his Monday interview, Braman said the arrival of a second full-time general surgeon would be by the end of March 2019.

“The challenge we have with the BHU is similar; we need a second full-time psychiatrist, one who will live in the area and that is also proving to be a bit of a challenge,” said Braman.

He also hopes to have this doctor in place by the end of the first quarter of 2019

Leone reviewed the financial summary with the board. For the month of September, NRMC had a net loss of $291,143.

Since September was the close of the first quarter of the hospital’s fiscal year, Leone’s report noted that while year-to-date expenses are nicely below budget, the shortfall in gross patient charges has resulted in first quarter operating loss of $763,928.

Year-to-date patient charges were $25.6 million but that was short of the budget by $2.3 million. In terms of net revenue, the first quarter recorded a shortfall of about $800,000.

And what is the cash position of the hospital?

Said Leone, “While the financial report shows we closed September with $412,854 or four days worth of cash on hand, I’m passing out to you now a page with the cash flow projection from the start of October into January of next year.”

As of Oct. 6, unrestricted cash stood at $1.05 million.

“So as you can see, yes, we are short of cash and have to watch our spending carefully but other than the old bill for Cerner and the management fee for Freeman, we are current on all our bills, so our cash is tight but OK,” said Leone.

Asked how much it takes to meet payroll at NRMC, Leone said it is under $630,000.

Besides providing a general outline to how NRMC plans to move forward and a review of financials and the hospital’s cash position, the other matter reviewed by Leone was a review of the impact of the closure of Mercy Hospital, Fort Scott.

Distributing a three-page handout on the patients served by Mercy, Leone said “As you can see on the first page, in fiscal year 2017, Mercy had 869 patients from Bourbon County while second was 126 from Vernon County. But the second page shows that during that same period NRMC only got 19 patients from Bourbon County.”

The last page showed Mercy’s significant decline in its number of patient discharges while from fiscal Year 2017 to 2018, NRMC’s number rose by 15 percent.

As Braman reflected over the past year, he noted in this month’s written report to the board, “there’s one area that has stood out positively … we have reduced cost.”

However, he made it clear you cannot cut your way to profitability rather, the hospital needs to grow its volumes.

Again as his board report stated, “The one glaring item that continues to standout negatively on our financials is declining volume and its impact on revenue. For NRMC to be solvent, for NRMC to be successful, it must have a growth in future volume.”

This led into what Braman stated was the greatest variable upon the future of the hospital, “consumers making the choice to access their local physician and/or hospital as a priority can result in positive gains and continued access.”

Or as he stated in Monday’s interview, “The single greatest thing people can do to help and strengthen this hospital is to use this hospital and make NRMC their choice for healthcare. That alone would change everything for the better and keep it that way.”

Asked to look ahead, Braman began by quoting a line from the 1995 movie “Apollo 13,” saying “Failure is not an option.”

While he said he enjoys the employees at Freeman, he spoke of the level of commitment by employees at NRMC saying, “They are invested, not only in their work ethic but in the patients they serve. This hospital is not about us but the patients we serve and the community we love.”