Hospital Board discusses financial condition, options

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The Drew Memorial Health System Board of Directors met Monday, January 23, for the regularly scheduled meeting with representatives from Baptist Health to discuss partnership options.

“We have been having discussions about what some of our options might be given the challenges we have been dealing with lately,” Chairman Mike Akin stated. “We have invited Doug Weeks and Troy Wells from Baptist to come down and visit with us. As you know, they have been successful in having some kind of alliance with some other hospitals and they have done that for a long time.”

Wells, CEO of Baptist Health System, opened the conversation by giving information about his background in rural healthcare. 

“I feel for the situation you are in now, and I have been there before,” Wells stated. “I have been with Baptist since 2006 and we now have four regional hospitals in our group, Arkedelphia, Heber Springs, Malvern and Stuttgart. These hospitals have been very successful with our model.”

 “Things are going to have to change for healthcare to remain successful in Arkansas,” Wells added. “Payment mechanisms have to change. We have been surviving for a long time. We can’t afford to not look for as many options that are out there so we can remain strong.”

“We’ve made a lot of progress physically at this hospital and we provide a lot of great services,” Hospital Board Member Carl Lucky stated. “ But, we are struggling to keep the right people in the right jobs for a long enough time to get things accomplished.”

Lucky then posed the question to the representatives from Baptist and asked how they would handle this difficult staffing situation.

“When you lose a key person, it all kind of unravels,” Wells said. “Arkedelphia doesn’t have to worry about that. They are not dependent on this one person that knows how to do this one particular job. This does not apply to the nurse at the bedside but it does apply to the coder, the biller, the people that understand the computer systems.”

Wells went on to indicate that there was always someone available within the Baptist Health System that can do office/administrative type jobs.

“When we look at our statements today, it is probably the worst one we have seen in my tenure on this board,” Lucky added.

According to the December financial statement, cash on hand decreased by $510,102 in the month of November and salaries were over budget by $177,041. The financial break down stated that the salaries being over budget “is primarily driven by the use of in-house contract nurses in multiple areas. We also paid administrative bonuses for a total of $100,000.”

It was noted by Hospital CFO Melodie Colwell that these bonuses were not Christmas bonuses but performance based bonuses within employee contracts based on the previous fiscal year and that overall, December expenses were under budget by $159, 201.

The Operating Statement provided to the board members and media stated that for December, the hospital had a loss of $1,057,021. Cash on hand decreased from 138.07 days to 26.78 days

“It’s a reflection of what you are talking about,” Lucky stated. “We have hired two different institutions to help us code and collect and bill because we can’t keep enough quality people here to do it on our own. Now, our patient volume in 30 percent lower than when Covid started and we can’t survive like that.”

Weeks added that the employee turn over rate within the Baptist Health System has remained low over the past several years even with volume changes.

“The regional hospitals in our system operate in positive operating margins,” Wells added. 

Chairman Akin pointed out that Drew Memorial is a county owned hospital and newly elected County Judge Jessie Griffin and County Attorney Cliff Gibson were present for the meeting.

“Can you walk us through how a partnership works with a county owned facility?” Akin asked.

“Malvern, in Hot Springs County, was a county owned facility,” Wells stated. “Now, we have a county lease from their 501c3 to our 501c3 because of the sales tax issues,” Wells said. “Where there have been boards in place, we try to keep them in place as an advisory board. We meet with the county Quorum Court annually and provide them with financials and whatever information they want. Malvern is a lease with the county.”

Board member Wayne Owen asked if Baptist had “in-house” billing or if they outsourced that process. Wells stated that billing is done in house at Baptist but food service, janitorial services and bio-medical engineering services are outsourced.

Cliff Gibson addressed the Baptist representatives with a concise follow up question regarding potential changes.

“If anything along the lines of what is being discussed was to happen, this board would need to know what your analysis is and what you would change,” Gibson stated. “Obviously, you are not in a position to tell us that today, I assume. But, I assess that everyone wants to know what all would change. What is Baptist’s vision for the future? Why does it want to come here and think it can do a better job than what is already being done?”

Wells responded that the reason they were at the meeting Monday was because it was requested by representatives of Drew Memorial that they come take a look at the facility and situation.

“We have never said no to a request to come look,” Wells said. “Apart from that, we care for a lot of people from South Arkansas. Healthcare in Arkansas is important to us. We are a 100 year old Arkansan organization and we care about people. Our plan would be to come back to you with an assessment of what we see and a plan of what we would do if we were here and what it would look like if we did it that way. It would be up to this board to decide if that was something to pursue or not.”

“We are going to do a significant comparison to our other regional facilities,” Weeks noted. 

Wells and Weeks stated that they could be ready to present options to the board as early as the February board meeting.

The next topic discussed was hospital employee health insurance.

Currently, the hospital uses Blue Cross Blue Shield for employee health coverage. The proposed cost for the upcoming year to remain with Blue Cross Blue Shield is an increase of seven percent from the previous year.

Other options that were presented were switching from BCBS to United Healthcare or Cigna to save on costs. After some discussion, Hospital CEO Scott Barrilleaux recommended that they look into switching to United Healthcare for the significant savings.

The board then spoke via conference call with HRG, the company that handles the hospitals coding and billing. According to that report, the turn around time to get a case coded is more than 10 days. Their goal is five days. Issues with improper use of insurance pre-authorization were also discussed. Lucky pointed out that if they could recoup the money that had been lost on lack of proper pre-authorization, the financials would be in much better shape.

CEO Scott Barrilleaux gave a report from a recent Arkansas Rural Hospital Partnership meeting. At the meeting, the partnership reported that the member hospitals in Southeast Arkansas had losses ranging from $25 million to just over one million. 

“The message was the status quo was not sustainable” Barrilleaux said.

At a Council of Government Relations meeting, the top priority area as a group of hospitals in Arkansas was to try to get Medicaid rates increased. 2007 was the last time hospitals received a rate increase on the inpatient side. In 1992, there was a rate adjustment on the outpatient side and that was a rate decrease. There is a bill at the current legislative session that will provide a rate increase but it is going to take some advocacy, Barrilleaux said.

The board also discussed but took no action on replacing an outdated Fluoroscopy machine that had broken down. The hospital is currently using other methods to conduct some of the functions of the fluoroscopy but they are not as efficient according to staff.