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GRMC Board discusses problematic financial situation

At a Friday meeting of the Gila Regional Medical Center Board of Trustees, the main topic of discussion was the impact of indigent fees being frozen at the state level, due to allegations by the Centers for Medicare and Medicaid that New Mexico had received too much funding for the past 13 years.

Other topics included honoring employee Mario Garcia for 15 years of service at the hospital; the program, in which seven employees who have completed Level 1 of the three levels of an operational program to manage projects to pull waste out of them were recognized; a report by Tamera Ahner of Hidalgo Medical Services on the cooperation with GRMC on the FORWARD program promoting medical careers for area students; and several reports from board committees.


Chief Executive Officer Brian Bentley said if the sole community provider funds, which pay for indigent care, are not paid from the state, "it will have a dramatic effect on the hospital. We are doing everything we can to reduce costs."

Board Chairman Jim Leidich said the gap in revenue would be from $5.5 million to $12 million a year if the federal government withholds the funding. "It does not include the $500,000 effect of sequestration."

Bentley said the worst case would be the $13 million usually received from CMS being cut to $2 million to $3 million. "Sequestration will likely come and go, but the expectation is for the replacement to be expensive for us."

In a conference call with New Mexico Human Services Department, several of the board members were told "CMS said it would get to it, when it gets to it."

Trustee Robert Morales Sr., asked if communication with the senators and representatives would help.

Bentley said HSD said "they are doing everything they can for us, but all the leverage is on the federal side. If CMS gets comments and inquiries, it has threatened to go to the Office of the Inspector General, which would take a minimum of six to 12 months to investigate. The worst is that hospitals would have to give back about $2 billion from the beginning of the state program. It would bankrupt all rural hospitals."

Craig Stewart, GRMC chief financial officer, said the Hospital Association, which represents rural hospitals, is traveling to Washington, D.C., "but they have to be careful what they say and ask for."

"We're technically supplicants," Bentley said. "CMS has been clear on what constitutes stepping on toes, so we have to be careful."

"The long conference call we had with HSD was not encouraging," Stewart said. "We were told the $260 million we would expecting for the year, would be cut to $160 million for 18 months. We may get 50 percent of what we usually do. Into 2014, it could be 25 percent."

Leidich said the hospital is owed $9 million at his point, "which includes $2.5 million of our money. We have received nothing since October, and the October payment was stopped."

"We have to try to divine what all this means," Bentley said. "HSD made it clear they will not talk to us. Up until two weeks ago, we were being told this year's money was just delayed. Two weeks ago, we were told we might receive only 75 percent of the money, but we had no input into the decision."

Steward cautioned that the overall funding could be as low as $65 million, with $200 million taken away from rural hospitals.

Trustee Charles Kelly said he found it frustrating that "we can't talk to someone."

Leidich said some of the weaker rural hospitals are in dire shape.

"Some are going bankrupt," Stewart said. "The one in Gallup is up for sale and had to borrow from the county to cover payroll."

Bentley said CMS is sending the message that if anyone pushes too hard, it will demand payback of 13 years worth of payments in 30 days. "It's perfectly legal, but not fair or nice. The state government did something wrong, and the federal government has the rights to recruit that money. None of us is quite sure what, but it goes back 10 -15 years."

Leidich said losing $6.5 million would have to be a write off by the hospital.

"If we got no more money, it would be $9 million, if we gave them no more money," Stewart said. "That's through March. Through the end of the year, it would be a $12 million to $13 million loss without the refunding of our match money of $2.3 million.

"If we get 50 percent of what we are owed this year, in addition to getting our money back, it would be a $6.5 million loss by the end of the year," Stewart continued.

Kelly asked if the hospital had had any clues.

"The first time we knew about it was at the end of January," Stewart said. "Before January, we were told there was a temporary hold, but there has been no resolution. We were told the county should continue to submit payments, so we did. At the end of January, we were told the state had made an error for the past 10 to 13 years."

"We knew the payments would be going down gradually, and we were planning for that," Leidich said.

Bentley said hospitals usually have time to address reductions and are given time to accommodate them. "But now the hospital payment is the piggy bank."

Stewart said the hospital asked what happens if the payment is not made to HSD. "There is a risk we could lose our $2.5 million that HSD already has. We're not stupid. We're not going to send the next payment, and we're not the only ones."

Leidich described it as a classic Nigerian scam. "You'll give me $1 million, if you send us $1.5 million."

Stewart said the $2.5 million is sitting in a bank at the state giving the state interest. "I think all the counties agree on not sending another payment."

"We have to devise a strategy in the hospital here, so that we will be here in five years, without the help of the feds," Leidich said. "It will be a major change in our objective where we continue to give the best care. It's easier said than done and is a staggering challenge. As we've seen over the past four to five years, the hospital business is changing even without payment challenges."

He cited statistics saying admissions are down 26 percent, patient days down 22 percent, births and outpatient services down, surgery is down 15 percent, but total man-hours are up 7 percent, full-time employees are up 7 percent, and other costs up 30 percent.

"No longer are we just fine-tuning, we are talking about changing how we do business," Leidich continued. "And the feds are not going to help us. The state thing was a big surprise."

Benley said reductions are national norms. For instance, no longer is a one-day stay an inpatient service, it's considered an outpatient service with the patient "under observation. We're not unique. All hospitals are addressing these issues."

Leidich said the result is that there are 10 percent fewer hospitals generally in rural areas.

Morales said caregivers should be educated so they work harder and made a better team.

Stewart said for the past three months, the hospital has been telling everyone that it is facing cuts. "We are asking them for suggestions for cutting."

Leidich pointed out that 70 percent of GRMC's revenue comes from Medicare and Medicaid.

"We're still in better shape than other rural hospitals," Bentley said. "We will still have a $60 million budget, but we will have to determine what provides the best value. Several hospitals in the state are in far worse shape than us."

Stewart said the hospital is down to 107 days of cash, and by the end of June, will have less than 100 days of cash.

"In spite of this, I continue to be optimistic," Leidich said. "Sometimes when things are really bad, one can achieve great things."

Stewart said the rate of losing cash is over $1 million a month, about five days worth of cash. "We need to preserve our reserves."

"It's clear we can't go forward on the $10 million bond, but we are debt-free," Leidich said.

"We just have cash going out the door at a worrying rate," Stewart said.

"What if the board ordered you to call HSD?" Kelly asked.

"I would consider resigning," Bentley said. "I don't think calling HSD has a chance of doing good, and it could be detrimental to the hospital."

Stewart said the Hospital Association is right in the middle doing everything it can to do the best for the hospitals. "I think HSD is trying to do the best it can. They are not withholding information. That's why the Hospital Association is going to D.C. next week."

"We have to deal with what we can change ourselves," Leidich said. "We have to do it now, and we have to start with what we can control."

Trustee Dr. Darrick Nelson said: "It is fairly evident that we provide very high quality care.

Other business dealt with the new cardiologist, who has been hired by the hospital.  Bentley said he went "from being bored to being tired overnight. We have hired a nurse practitioner from in-house that he will train. Dr. Ratliff is already expanding his capacity, but we're still waiting for the VA to get out of the old clinic, and then some modifications and clean up will be done to move his office there. By the end of this month or beginning of next, he will begin seeing patients. There are well over 20 patients waiting to see him. We definitely have the demand."

During the Financial Committee report by Trustee Pam Archibald, she said changes had been made so that Ratliff could order and read his own EKGs in his office. She also recommended the recruitment and income guarantee for Dr. Fred Wendler, who is returning to general surgery.

Archibald recommended the buyout on the lease for an echocardiogram machine, which Ratliff was leasing. Bentley said the optional software will be an upgrade over what is available in the hospital, and the device is hand portable, to be used in Ratliff's office and at the hospital, giving GRMC access to two machines.


Chief Nursing Officer Pam Fulks said the department is moving ahead with the telemedicine program, which would give the option of a having neurologist by telemedicine in the emergency room in case of stroke patients coming in.

A few new graduate R.N.s will likely be brought into GRMC.

Clinic Services' Raymond Goellner said the pharmacy was under budget by about $700,000, still ahead by about $3 million in gross revenue.

Howie Morales presented the Planetree report and said the hospital is at 89 percent, striving for 100 percent to get the status recognition from the program. He said patients have given caregivers high marks.

Plant and Facility Committee Chairman Dr. Roberto Carreon said the only thing he had to report was to ask what to do with contracts already in place.

Human Resources Committee Chairman Kelly reported the number of employees is dropping slowly and the number of contract people is also dropping.

The board then went into executive session.

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