County Commissioner and Hosptial Commissioners provides an update on the Hospital | Eastern North Carolina Now

    We are about 30 days away from receiving replies to the Request for Proposals (RFP) that were sent to 14 hospital management companies. We can expect the Proposals to address the issues set out in the RFP's. The RFP asks for specifics about how the submitter intends to insure the delivery of quality health care. You can review a copy of the RFP by clicking here. The RFP is solid, but it does not address some of the important issue the Hospital board will have to address. One of those issues is short term cash flow.

    The hospital has been losing about two million dollars per year until recently. In recent months the cash flow has improved, but not enough at this point to solve the cash flow problem. To get all of the payables (what we owe) up to date will take nearly four million dollars.

    It is quite possible that the RFP process will take as much as six or seven months to work through, we have been told by the consultant. So we have got to improve the Hospital's cash situation to insure that we can continue to operate while we negotiate an affiliation agreement…if one appears to be realistic.

    But we cannot count on potential affiliates solving the Hospital's problems; certainly not in the short run and possibly not in the long run. If we can increase revenue and decrease costs we can position the Hospital to continue providing quality health care and be able to negotiate from a position of strength.

    The Hospital Board is looking at improving revenue by getting outside help to insure that our billing is correct. Health care billing is a complex task and we need to be sure we are billing appropriately. In addition, we are working to collect all that is owed us. And we are working to reduce cost.

    One of the toughest areas to deal with is salaries. Most businesses in recent months have had to cut payroll. The Hospital has been serving fewer patients and with fewer patients we may not be able to maintain current levels of staffing. We've got to take a hard look at, and may have to make some hard decisions about reducing personnel costs.

    Some have said that Hospital employees have taken a five percent pay cut. And while that was done, it has now been restored, with an additional two percent merit pay increase for many employees. Total personnel costs are approximately $36 million out of a $77 million budget, not including approximately $13 million in doctor fees (salaries).

    And many of the cost reductions will be "one-time" savings which means the amount we can recoup over several months will likely decline. We simply cannot cut our way out of this problem.

    We must increase revenue. If we are not able to increase revenue it is going to be very difficult, if not impossible, to achieve a viable cash flow situation.
    
    We need to achieve $2.5 million in cost reductions. That can be achieved by an across the board cut in salaries, reduction in benefits, such as the hospital share of the retirement plan ($700,000 +/-) or a reduction in the number of positions. Other efficiencies are also being investigated.

    It is important that the public and the medical system employees understand that we cannot assume that any outside affiliate will simply come in and continue to absorb $2 million a year in losses. Any affiliate, be it a "not for profit" or a "for profit" operation will be faced with the same thing our Hospital is faced with right now: Increase revenue or reduce costs.

    If we sell or lease the Hospital to an outside group they will insist on having the ability to control costs. That control will be more removed from us if it is an outside organization. Control of what decisions are made will be a major issue in any affiliation. We may not be able to maintain local control but we should retain enough control to insure high quality health care continuing in any new organizaitonal arrangement.

    Everyone needs to understand that making these hard local decisions about controlling costs will be one of the most important issues going forward.

    And regardless of how successful we are in reducing costs or increasing revenues we must always insure that the quality of care remains high, as it has been. And that is also true if we sell or lease the Hospital to an outside group. How we insure quality will be a paramount issue.