[Editor's Note: This is the first of an anticipated two articles on the GRMC governing board August meeting.]
By Mary Alice Murphy
At the beginning of the Gila Regional Medical Center Governing Board meeting on Aug. 26, 2021, eight staff members of the hospital received recognition for their service. They included Jeremy Ybarra for 10 years of service in security; Katie Ormand for 10 years in nursing; Victor Ruiz, 10 years in security; Roxanna Olea, 5 years in nursing; Jenifer Cardena, 5 years in patient financial services; Brianna Romo, 5 years in medical staff services, Rebecca Sorrell for 5 years in nursing; and Lucinda Garcia, 5 years of service in accounting.
With no public input, the governing board members, who are also county commissioners, governing board chair Alicia Edwards, board members Chris Ponce, Javier "Harvey" Salas and Billy Billings, went into executive session. Harry Browne was on vacation.
After the executive session, the governing board members came out into open session to hear reports.
The first was from the Interim Chief Executive Officer Scott Manis. He said the hospital would be following the letter of the law on the vaccine mandate from the state of New Mexico. "We have about 80 percent to 85 percent of our staff vaccinated. The other 15 or so percent, we don't have vaccination status on and are assuming they are not vaccinated. They will be required to get vaccinations or follow the intent, which is to have either a medical or religious exemption and be tested on a weekly basis. It is our intention to provide some of that testing opportunity for the employees at the hospital, but we are having trouble getting enough kits because this is new. Those kits are flying off the shelves of all the warehouses of our suppliers. We have some on order and have also pursued other options. They will also have opportunities to be tested locally by the Department of Health or by HMS (Hidalgo Medical Services), CVS or whoever else does testing locally. We will require that testing be completed and submitted to us weekly. We have been finalizing the policies and will get it out to staff today and tomorrow. There have been questions about what we will do if employees refuse to get vaccinated or tested. We have determined that it will be in our best interest not to immediately terminate them, but rather we should put them on PRN status. They will remain employees of the hospital, but it will impact their benefits, such as health insurance and such. That will be up to them to elect or they can elect to terminate on their own. We will provide that as an option."
"We have recently become members of the New Mexico Rural Hospital Network, a group of about 10 or 11 similarly sized hospitals throughout the state," Manis continued. "They advocate for smaller hospitals at the state level and provide best practices. We had a phone call among the CEOs and what the hospitals are doing on the vaccination front, and that information helped us create our policy. They also have affinity groups for every area of the hospital, for CEOs, CNOs, credentialing etc. to pull those peers together with our directors as well on a quarterly basis."
He said the next item he wanted to report on was about the application process on the EMS tariff application. "We have submitted that application for the pre-application process to the PRC (Public Regulations Commission). We hope to hear any day from them. Tomorrow, we are kicking off a new initiative. We call it Breakfast with the CEO. There's no agenda, just a chance to sit around and talk about anything on a monthly basis and get feedback on how to improve their work environments. We're doing it on the basis of their birth month, so every employee will have a chance at it."
"We had our very first ENT (ear, nose and throat) surgery with the National Sinus Institute and Dr. Alexander this week," Manis said. "It was on Tuesday. It went well, so we are reinitiating that surgery in the hospital and look for it to go well."
"We are kicking off our employee surveys on Sept. 20," he said. "It's something we've been planning for months, giving the employees the opportunity to give feedback on their department, overall operations of the hospital, the administration, tools they need to do their job. That will run for about three weeks and the company we are using will aggregate the data and send them back to us. That should take about six weeks. When we get it, we will share with the governing board and then get it out to the public. It will help us make plans on how to improve."
He highlighted a new training level coming. "We have basic EMT services here, but in working with Doña Ana Community College, we will be bringing advanced training to the community. They will do the training at the main EMS station. Nine EMTs have signed up for that and four are already our employees. The course will end in December. It gives local people the chance to enhance their careers. I'm very supportive of that with them."
Manis went into the HR report, which he said would lead into Greg's (Brickner, chief financial officer) report. "I wanted to touch base on the challenges we are facing across the country, especially rural hospitals, particularly the staffing challenges."
He noted that 136 rural hospitals closed in a 10-year period, 2010-2020, according to Beckers Hospital Review March 15, 2021. "Those are staggering numbers. There are in the neighborhood about 5500 to 6000 hospitals in the country. Most recently almost 900 (897) are at risk of closing, with five or six in New Mexico. That's 15 percent of all the hospitals across the country. 25 percent of rural hospitals were at risk of closing, because of financial challenges. Rural hospital closures is unfortunately a thing that has been happening. This governing board took some strong action, saying 'we can't let that happen in our community.' We thank you for that. Things weren't looking very good. Over the past 8 years, the hospital lost $47 million, with only two years with a positive bottom line. One in 2018, it was reported positive at the end of the year, but then in 2019, there was a $5 million adjustment, so each year should have been about an average of a loss of about $5.8 million a year. This is after taking into account depreciation. Future capital needs were not being funded. Depreciation for this hospital is about $4 million a year. Even adding that back in, about $20 million, it still shows substantial negative balances. They were using cash reserves, which were dwindling. A number of years, there was substantially more cash on hand. We are at about 65 days of cash on hand, which is about $11.5 million to $12 million on a daily basis. Cash kept getting burned down each year. Ultimately, cash is king. You invited HealthTechS3 to come about a year and a half ago. In May of last year, we identified about $12 million for targeted improvement to stabilize the hospital and put it on the path to recovery. I will turn it over to Greg, and then I'll come back with the rest of the HR report."
Brickner thanked the governing board for allowing him the extra time for completing June and the fiscal year. "We were able to run some other calculations to make sure we are in the right spot for financials."
"June and July have been pretty good," he said. "In June we had a drop in total surgeries and discharges. It highlights the impact of our physicians. In June, we had several on vacation, so it shows that a lot of our volume depends on surgeons who are on our hospital staff. One or two physicians are a large part of our surgeries. If you see one of our physicians out there, please thank them for serving in our rural community, because it's incredibly important."
He noted the surgeries trend for July is up, as are the total ED (Emergency Department) visits.
In the key metrics for July, Brickner said the financial strength index turned positive in June to 1.2 and now it's at 1.48. "It uses the trailing 12-month results, as well as the amount of cash on hand, capital expenditures and other items. It's a HealthTech metric. But now the trend is positive. comparing to last year at this time when it was negative 7.81, so it's a very significant movement there."
He then showed a table of the June 2021 results, "when we ended up booking up higher reserve for bad debt, which lowered our net patient revenue. We also received the forgiveness for the PPP (paycheck protection plan) loan. That was a big win for us. It was federal money we received last year, which helped retain the cash flow. Covid kept the hospital open. We got the money, and we are supposed to pay it back, and then they came through and said we met the criteria for it to be forgiven, so we don't have to pay it back. The net gain for June was a $12 million improvement year over year. Our EBIDA (earnings before interest, depreciation and amortization) was a $2.6 million improvement over last year in June."
Brickner said for the full fiscal year, EBIDA had an $18.7 million improvement and net revenue had a $24 million improvement. "It's important to remember that we operated for 12 months with uncertainty because of Covid. But still the staff, the administration and everyone came together to make our mission successful."
He showed a chart of the expense variation over the past two years. "Not only did we lower expenses, but we also lowered the variables. We have made sure we have the right staffing ratio and the right supply ratio. It helped us even out the uncertainty, even with Covid layered on. If you take out the $6.2 million PPP and remove that, in May I had to guess, for budget purposes, where we were going to end up at the end of the fiscal year. I forecast a negative $453,000 and the actual was negative $548,000, so I was really close. The key thing as we move forward is that we have to beat ourselves and keep our eyes on things and build on the momentum of the last fiscal year."
Brickner said the results he had just shown were preliminary and "we will have three known fiscal year 2021 audit adjustments. The first will be the final cost report settlement. Based on what we know today, we believe that will be positive. The second one, the provider relief fund calculation, will be coming through again like last year. It's why I presented the audit in March instead of last fall. And the third, the HAP /TAP payment catch up (Hospital Access Payment/Transition Assistance Program)." The TAP payment is the replacement for the safety net care pool. "We have an accrual and if that comes through, we expect it to be positive. The fourth one, we may have another one, because the state finally got its Medicaid numbers. We also expect that to be an improvement over the prior year."
He said he expects to have three audit findings. The hospital is still working on the 403b/501c3 issue. The fixed asset inventory, "we're also still working on. Because of the Medicare cost report, we'll have to keep the audit open to get the most exact number on the cost report as possible. So that will cause a late filing and that will cause another finding. Yesterday, we had a conversation with the county manager, because our audit also holds up the county audit."
Edwards said she thought it should be known that the hospital will be in contact with the state auditor's office, so they won't be surprised at any of this. "Correct," Brickner replied. "I've already told them of the first two and will make sure to inform them of the late filing, as well."
Brickner then went into July results. "We began the fiscal year and month of July with a positive $234,000, which was $1.9 million better than the prior July. Our EBIDA was $584,000 with lower expenses, at $1.8 million better than the prior year."
"I just want to say how much we appreciate your reporting," Edwards said. "It's amazing to listen to you and have confidence you know what you're talking about. Congratulations to all the folks in the Finance Department who have been working to fix a mountain of problems."
The next article will start with the rest of the human resources report by Manis and will finish the meeting.