NRMC makes application for Sole Community Hospital

Friday, January 25, 2019

After Freeman Health Systems CEO Paula Baker announced to the council on Tuesday night that Long-term Care Administrator Steve Branstetter would be the new CEO for NRMC, she gave a brief presentation to the board which included progress, goals and a request for a $1,000,000 infusion to the hospital from long-term care.

Baker noted the one year anniversary of Freeman Health assuming management of NRMC was in November and gave a brief recap. “We have come a long way. We have finances under control and new and positive movement has definitely taken place.” She said some big improvements have been made and acknowledged there is still “a ways to go” but that some significant improvements in performance have already occurred.

“One really encouraging thing for the hospital also,” she continued, “is that we have made application for Sole Community Hospital status which was made possible by the unfortunate closing of Mercy Hospital in Ft. Scott, but that did open the door for us to make this application and we expect to hear back very soon. That will yield a significant cost savings for the hospital.”

Baker went on to request, as ACA Financial Guaranty Corporation directed, the city to transfer $1,000,000 to the hospital to help with expenses, needed capital and continued improvements. “I want to emphasize that these funds will be used for recruitment and hospital operations. This will help the hospital continue in the positive trajectory that we are enjoying right now and allow us to bring more physicians and specialists to the hospital and community and keep it going on that upward trend.”

Freeman CFO Steve Graddy explained the details of the transfer request. “Two things that we told them we would use the money for: accounts payable (excluding Cerner) – about $300,000 for that to get it caught up – which leaves $700,000 for reserves for things that might come up at the hospital whether that be capital or recruitment. We have told ACA that we would not use those funds to reimburse Freeman. We want to make sure we get at least a couple million dollars built up in cash before we look at installing the monthly payments that started last November.”

According to Graddy, Freeman has provided a roadmap to get NRMC to break even and into some positive cash flow over the next year. “This includes the sole community status. We’ve worked with medical staff in looking at our hospitalist program – that’s about a $500,000 savings per year that will come to the hospital – that started Jan 1. We received word this week from Medicare that we will receive another quarter million a year in increased reimbursement for ‘bad debt’ if you will, or write-offs. So things are definitely going in the right direction.”

Councilman Ryan Watts asked Grady to explain the Sole Community Hospital in layman’s terms.

“We and Butler County are the only acute hospitals left,” Graddy answered. “Lamar is a critical access hospital by Medicare designation and we are just far enough away and we have 80 percent of volume coming from our immediate community – so we qualify for Sole Community Hospital status. With Medicare we get a better payment system. They will infuse $800,000 to $850,000 a year into us by that Medicare designation. The closure at Ft Scott made this available.”

Councilwoman Dr. Carol Gallagher addressed the speakers, “One of the challenges in our community is our lower socio-economic populations. I’m curious what potential there is to look at grants and other funding sources to help support. It’s a big need that might not help the bottom line of the hospital but could help the bottom line of the community.”

“It is a big need,” Baker answered. “We have been really looking into that. The very fact of the demographics of this community can lend itself very favorably to many grant applications and can really be used in our favor. We have definitely been dissecting that opportunity, so you are right on with that.”

NRMC Board of Directors Chair Steve Russ added that “what Freeman has brought to us is the ability to give our people support – they have invested a lot of time and people to help our people at NRMC do their job better and we haven’t paid them back yet – to my understanding – and so we do owe them money and we certainly want to be able to pay them – but they gave us the support that the management of Quorum couldn’t.”

Russ emphasized the need to increase business in Vernon County to keep the hospital going- that people in the county need to utilize NRMC services. “We are as lean as we can get,” he said, “and we are as efficient as we get.”

“We are floating in that 3-10 day cash on hand range and if we could have a boost there we could do some recruitment… The board is extremely happy with what Freeman’s offered us and the direction we are heading, we are just at a tough time.” He also said they didn’t like “going to the nursing home before and we were always able to pay that money back – and then ACA kind of forced the issue last year and so here we are again – hopefully we won’t be here again.”

Mayor Brian Leonard added that, “At this point I would like to ask the chairman of the long-term care board to inform his board so they know what is going on so it’s all transparent. I know there will be a question about the city’s money, you know, ‘the city money will never get paid back.’ I know there was some question about that the last time.” Leonard requested the wording reflect that there is possibility of repayment in the future.

Russ agreed. “Yes, I think that is a good idea. I think in the long-term the nursing home will really benefit from the hospital staying on its feet – so in the long term, the hospital would love to pay that money back.”

Baker said she thinks that “having Steve Branstetter in the role of CEO at the hospital, with his history and connection with the nursing home, is going to create a very positive synergy and I think that line is going to be very helpful.”

The council agreed to discuss at the next session after they have heard back from the board and from the city manager and the city attorney. “Hopefully,” the mayor said, “this will be on the agenda and we can discuss it at the next meeting if this transfer needs to take place.”

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