The Times Journal & Russell County News
Wednesday, Jul. 23, 2014 — RUSSELL SPRINGS & JAMESTOWN, KENTUCKY —
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Board, staff want answers after hospital audits delivered
In Nov. 27 Issue
By Greg Wells
Times Journal Managing Editor

Not everyone was impressed with the clean bill of health given the hospital in its financial and management audits.

"If you're not going to do your jobs," said Dr. Wendell Miller; "get off the board."

He said that politics and repeated changes in management have stymied progress at the hospital, while other area facilities passed them by.

"If you are going to plan on doing something lets go on and do it," said Miller as he continued his address to the board of the Russell County Hospital.

Miller said the hospital is loosing patients to other hospitals and providers because the board and management has not provided a tangible goal or plan to move the hospital forward and the staff is disheartened at the situation.

The Operating Room Director was joined by Chief of Staff Dr. Rick Miles in stressing the staff's feelings regarding the direction the hospital has been lacking.

"We need to be planning," Miles said.

He added that the physicians and other staff have passed up better opportunities to stay with the hospital because they have believed in it and believed in this area, but both men indicated that the staff was feeling dissatisfied with things as they were.

That feeling was mentioned in the auditor's report on the management of the hospital earlier in the meeting.

The auditor, David Bundy, summed up the senior staff members' feelings with their answer to the question of where they felt the hospital would be in five years, "same place it is today, only worse."

That auditor's first item in the summary and recommendations is to establish a common vision amongst the staff, management and the board, along with "key stakeholders" in the community, about setting a course for the hospital.

"There needs to be a strategic plan that everyone can agree to and begin to work towards," Bundy wrote in his report. "If not, soon the opportunities the hospital has will begin to disappear."

In its response to the recommendation the leaders at Alliant Healthcare Management reported the hospital's present plan is limited in scope and that decisions about how to progress should be made with all the interested parties.

The auditor also reported that the hospital should renegotiate their contracts with insurance companies and should closely watch to make sure that those companies are actually paying what they are contracted to.

In a random sampling of the bills to be paid by Anthem and Humana it was noted that seven of the 60 claims examined appeared to have been underpaid and four of those seemed to have been underpaid, "substantially."

In their response the hospital administration reported that the contracts had been renegotiated and a program to randomly verify the companies' payments based on the new contracts.

The auditor also noted the administration's problems with high rates of charity and bad debt and their efforts to do a better job during admission to move patients into the state and federal programs that might have paid for some of those cases in the past if they had been submitted to them.

An independent firm was contracted with by Alliant last spring to review admissions and help people who qualify enroll in the state and federal programs to help with hospital bills.

Bundy was positive in his report on the administration of the hospital and noted that some present problems can be attributed to bad decisions in the distant past, before the present management team.

"A hospital is like a big ship it can take a while to turn it," Bundy commented.

In the financial audit Bundy gave a positive report.

"It is a 'qualified' report. That means it's clean," Bundy said, explaining; "that is what you want."

The report noted a 7 percent increase in the hospital's net assets over the previous year and an increase of 12.5 percent in the amount of tax revenue received by the hospital.

With a smaller loss in operations compared to the preceding year the hospital netted a nearly 59 percent improvement over 2007's figures.

The hospital finished last fiscal year with $600,000 more cash on hand than in the previous year even after paying almost twice what it did the previous year on its debt and over $600,000 in capital improvements, according to the audit.

One of the auditor's warnings to the hospital leadership was that they needed to seize healthcare business opportunities or another provider would, and in doing so would not only prevent the hospital from adding services the hospital would lose those chances to increase revenue.

After approving the audit the board moved on to considering something the auditor had mentioned.

After a presentation regarding the need and was reported as expected positive financial results, the board approved expenditure for a new 16-slice CT scanner and a new Fluoroscope.

The combined total cost of over $760,000 for the machines over the next five years would be offset by only a small increase in the number of procedures done with the machines because of the increases in federal cost reimbursements to the hospital as well as some savings on the cost of service agreements, according to the presentation by Alliant staff.

The radiology staff reported that the equipment would mean that patients would be treated there rather than at other facilities and the more expensive 40, 64 and even 300 slice scanners was not justified by the needs of the hospital.

The board was also told that increases in compensation from the new contract with Anthem would begin to show up on the balance sheets for November.

On the October balance sheet CFO Ken Kimsal said the hospital was 4 percent better than budget in operational revenue, while being only 2 percent over on salaries.

Given that however, he also reported that the $15,000 operational net budgeted for the month was not reached as the hospital showed a $8,805 net positive for the month.

Operationally the hospital is still showing a positive result in operational revenue, with $231,340 on the books since the beginning of the fiscal year in July.

For the previous month's performance Kimsal said in an interview Friday that the hospital had been again hurt by high percentages of bad debt and charity cases but also that revenue was down because of lower-than-budgeted numbers of patients and procedures in September.

"The budget was for $39,000 on the bottom line," Kimsal said.

In actuality the hospital saw $22,216 in total revenue for the month.

At the Thursday night meeting the board also approved $13,000 for an architectural study to address overcrowding in the surgery, laboratory and radiology departments.

Previously the board had been asked to approve a $25,000 "master plan" for the hospital but had baulked at that expenditure indicating then that they did not see the hospital being in a position to act on the kind of expansion plans that were being suggested.

As the meeting was drawing to a close Alliant's Jeff Buckley and Dr. Rick Miles returned to the topic of planning, and Miles' question of why the hospital needed to pay for Alliant's services.

Buckley said Alliant would pay the cost of a "facilitator" to come in and help everyone interested define goals and the methods to reach them at a meeting after the first of the year.

Miles' question, which he said everyone was asking outside the boardroom, was why the hospital needed Alliant. Why couldn't the hospital simply work with a chief administrator or CEO hired by the board, rather than paying a corporation to provide those services?

"What is Alliant doing for the money," He said.

Buckley's assertion was, "You're still here."

He said that without Alliant's help the hospital would never have survived after paying to end their previous management agreement with another company.

Running a hospital was just too much for one man to do, Buckly said.

"Going solo is a suicide mission," Buckley told Miles and the board.

Board member Chris McQueary took exception to that position. He pointed out that only about 50 percent of hospitals in the state are managed by something like a kind of corporate management firm like Alliant, while the rest are managed by a hospital administrator.

"You're going to have to have someone else if not us," Buckley said.

He explained that they provide a range of professional services that the hospital would be paying others for if they were not paying Alliant and that an independent arrangement with all those professional would cost the hospital as much or more than their fees.

Miles said he and others needed to see financial information establishing that.

Buckley agreed and said he and others from Alliant would come down and meet with the staff in order to better explain what it was that the firm does to earn its management fee.

With that, the 3 and a half hour meeting began to break up.

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