Monday, October 15, 2007 9:25 AM EDT
Hospital takes hard look at finances
 Losses lead hospital to take hard look. |
WESTERLY – The Westerly Hospital’s forecasted near-$6 million deficit has forced administrators to take a “hard look” at the new fiscal year’s operating budget, presented to the Finance Committee last week but not yet blessed by the Board of Trustees, hospital sources say.
The budget is expected to be presented Nov. 5; in the meantime, the hospital is working off of a tentative spending and revenue plan.
Westerly Hospital CEO Charles S. Kinney acknowledged that as a rule the budget is presented in September, given the fiscal year ends Sept. 30.
“It should have been presented in September for October, but it’s been a bit of work,” Kinney said. “We spent a tremendous amount of time on this. We do recognize the losses (pegged at $6 million), so we asked people to take a hard look. It’s a decent plan – not a break-even budget, but nobody expected that with these losses.”
The hospital has seen annual multi-million-dollar losses for the past several years escalate steadily and incrementally.
A state report on the financial health of the state’s community hospitals last fall found The Westerly Hospital’s “health” as the worst of 13 Rhode Island hospitals. The analysis was conducted by the state’s Department of Health.
The closest to Westerly were Kent, which was ranked 12th, and Landmark Hospital, which placed 11th. Kent has since projected a near $9-million deficit for the just-concluded fiscal year, and physicians at that hospital voted “no confidence” in their CEO two weeks ago.
The Department of Health report came right before the hospital reported its then-fourth year of operating losses – more than $4 million. Now, Kinney told hospital staffers – and confirmed for The Sun – that losses for this past fiscal year will likely come in at around $6 million.
The hospital’s Board of Trustees, however, says don’t blame the administration.
“We have complete confidence in the administration, irrespective of the fact that they work under adverse conditions,” said Westerly Hospital Board of Trustees Chairman William A. Nardone. “Conditions (not under the control) of our community hospital, but (rather) a function of the reimbursement system and the unfair state of contracts between hospitals and (insurance) payers.”
Nardone said the board and the administration “are looking at all kinds of ways” to improve the financial help of the near-83-year-old community hospital.
“These losses cannot continue to be sustained,” Nardone said. “But look at what we’re facing. Bad debt, uncompensated care and difficulty recruiting physicians, but it is the status of reimbursement in Rhode Island that is the single greatest problem for The Westerly Hospital, and all Rhode Island hospitals. Our reimbursement is one of the lowest in the state.”
When asked why that is, Nardone replied: “That’s the $64,000 question.”
“This is where we need to find solutions,” he said. “The same procedure performed the same way with the same equipment should be paid the same from hospital to hospital. We need some legislative fixes here.”
Meanwhile, there are talks of a possible merger with South County Hospital. It, too, is facing losses over the past few years. Kinney and South County Hospital CEO Louis Giancola had said they had held talks regarding potential “collaboration,” and Nardone – in a column in The Sun’s People’s Forum – acknowledged that two board members from each of the hospitals attended the talks as well.
But, as Nardone said, “it’s a quantum leap from discussions to a merger, if it happens at all.”
“We may decide that a merger is not in the best interest of quality care delivery,” he said.
In addition to looking to continue “discussions with state officials, the director of the health department, the insurance commission and Blue Cross Blue Shield and United (Healthcare), we’re looking at a ‘hospitalist’ system,” found in Lawrence & Memorial in New London and South County Hospital, but not yet in Westerly.
According to health care professionals, in the traditional hospital system, patients are treated in a hospital by their own primary care doctor. In a ‘hospitalist’ system, primary care physicians give up care of their hospitalized patients to inpatient doctors and specialists.
Nardone said this type of system might “help with recruiting physicians.” In the past several weeks, the hospital has seen two doctors leave, both Nardone and Kinney said, unexpectedly.
“This came up as a result of discussions among physicians, the board and the administration, all major stakeholders. This is new to Westerly Hospital but not new to the industry,” Nardone said.
“Many doctors coming out of residency, medical school want to be employed by the hospital. We’re very close to making a final determination on this. We believe (this measure) will work to improve our financial (situation.)”
esantiago@thewesterlysun.com
The budget is expected to be presented Nov. 5; in the meantime, the hospital is working off of a tentative spending and revenue plan.
Westerly Hospital CEO Charles S. Kinney acknowledged that as a rule the budget is presented in September, given the fiscal year ends Sept. 30.
“It should have been presented in September for October, but it’s been a bit of work,” Kinney said. “We spent a tremendous amount of time on this. We do recognize the losses (pegged at $6 million), so we asked people to take a hard look. It’s a decent plan – not a break-even budget, but nobody expected that with these losses.”
The hospital has seen annual multi-million-dollar losses for the past several years escalate steadily and incrementally.
A state report on the financial health of the state’s community hospitals last fall found The Westerly Hospital’s “health” as the worst of 13 Rhode Island hospitals. The analysis was conducted by the state’s Department of Health.
The closest to Westerly were Kent, which was ranked 12th, and Landmark Hospital, which placed 11th. Kent has since projected a near $9-million deficit for the just-concluded fiscal year, and physicians at that hospital voted “no confidence” in their CEO two weeks ago.
The Department of Health report came right before the hospital reported its then-fourth year of operating losses – more than $4 million. Now, Kinney told hospital staffers – and confirmed for The Sun – that losses for this past fiscal year will likely come in at around $6 million.
The hospital’s Board of Trustees, however, says don’t blame the administration.
“We have complete confidence in the administration, irrespective of the fact that they work under adverse conditions,” said Westerly Hospital Board of Trustees Chairman William A. Nardone. “Conditions (not under the control) of our community hospital, but (rather) a function of the reimbursement system and the unfair state of contracts between hospitals and (insurance) payers.”
Nardone said the board and the administration “are looking at all kinds of ways” to improve the financial help of the near-83-year-old community hospital.
“These losses cannot continue to be sustained,” Nardone said. “But look at what we’re facing. Bad debt, uncompensated care and difficulty recruiting physicians, but it is the status of reimbursement in Rhode Island that is the single greatest problem for The Westerly Hospital, and all Rhode Island hospitals. Our reimbursement is one of the lowest in the state.”
When asked why that is, Nardone replied: “That’s the $64,000 question.”
“This is where we need to find solutions,” he said. “The same procedure performed the same way with the same equipment should be paid the same from hospital to hospital. We need some legislative fixes here.”
Meanwhile, there are talks of a possible merger with South County Hospital. It, too, is facing losses over the past few years. Kinney and South County Hospital CEO Louis Giancola had said they had held talks regarding potential “collaboration,” and Nardone – in a column in The Sun’s People’s Forum – acknowledged that two board members from each of the hospitals attended the talks as well.
But, as Nardone said, “it’s a quantum leap from discussions to a merger, if it happens at all.”
“We may decide that a merger is not in the best interest of quality care delivery,” he said.
In addition to looking to continue “discussions with state officials, the director of the health department, the insurance commission and Blue Cross Blue Shield and United (Healthcare), we’re looking at a ‘hospitalist’ system,” found in Lawrence & Memorial in New London and South County Hospital, but not yet in Westerly.
According to health care professionals, in the traditional hospital system, patients are treated in a hospital by their own primary care doctor. In a ‘hospitalist’ system, primary care physicians give up care of their hospitalized patients to inpatient doctors and specialists.
Nardone said this type of system might “help with recruiting physicians.” In the past several weeks, the hospital has seen two doctors leave, both Nardone and Kinney said, unexpectedly.
“This came up as a result of discussions among physicians, the board and the administration, all major stakeholders. This is new to Westerly Hospital but not new to the industry,” Nardone said.
“Many doctors coming out of residency, medical school want to be employed by the hospital. We’re very close to making a final determination on this. We believe (this measure) will work to improve our financial (situation.)”
esantiago@thewesterlysun.com
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