Southwest Memorial has plan to recover financial health

Monday, Sept. 3, 2018 7:45 PM
Cortez Mayor Karen Sheek addresses the Southwest Health System board during a meeting Aug. 29 about hospital finances.

Southwest Memorial Hospital is struggling financially, but a robust recovery plan has been implemented to right the ship, top managers told a crowd of 50 concerned citizens and staff at a recent board meeting.

Two organizations – the public Montezuma County Hospital District and the private nonprofit Southwest Health System – are responsible for hospital management.

During an hourlong discussion with the audience, members of both boards admitted their lack of oversight contributed to a crisis realized in late 2017, which led to firing of top executives, bond violations that fund an expansion project and layoffs of 40 full-time employees in August.

“As a board, we have to be accountable, and there are times we should have been quicker about doing things,” said SHS board chairman Paul Deshayes. “Going forward, we need to be the board that makes sure this does not happen again.”

There was a level of trust with former management that was misplaced, said SHS board member Steve Fusco.

“In hindsight, we should have been ringing the bell and questioning more thoroughly,” he said.

SHS brought in Community Hospital Corp. consulting to conduct a financial audit of hospital operations and develop and implement a corrective action plan.

“We have one chance at this, so we can continue to have health care in this community,” said Southwest CEO Tony Sudduth, of the consulting team. “We feel confident we have reached a position to build it back.”

“What’s the plan?” asked a man in the audience.

Craig Sims, senior vice president for CHC hospital operations, gave good and bad news.

Of the 6,000 hospitals nationwide, 20 percent are at risk of closing or are in a weak financial position, “and Southwest is on the list,” he said. According to a report in Bloomberg News, 30 hospitals close their doors every year.

“While this hospital is at risk, we firmly believe that it is viable,” Sims said.

A bellwether of hospital financial health is the amount of operational cash on hand. Southwest is required to have 81 days’ worth of cash on hand, or $13.3 million, but only has 15 days’ worth, about $2.5 million. The figure is in violation of a bonding agreement with banks that funded the recent $32 million hospital expansion.

The plan approved by the banks is to be at 30 days’ cash on hand by December, 45 days’ by February, and 60 days’ by next year, Sims said.

Recent layoffs of department support staff not directly involved with patient care will save $5 million per year, Sims said.

“We’re asking staff to do more with less,” he said. “We have a good plan in place.”

SHS currently is advertising for 14 positions, including the positions of registered nurse, staff pharmacist, ultrasound technologist, clinical and surgical supervisors, and X-ray and ultrasound technologists.

Sims also said Southwest Health is changing its purchasing practices, and will use HealthTrust Purchasing for supplies. According to Sims, HealthTrust will cut costs by 18-25 percent compared with current vendors, for savings of $1 million per year.

Improved efficiencies are also part of the formula. For example, time to “drop a bill” is an important facet of revenue, Sims said. On average, hospitals send bills within five days, but Southwest was taking 22 days. Southwest has cut that time to 11 days since CHC came on board July 1.

Other issues being addressed include improving inefficient information technology systems, implementing a more efficient system to monitor staff productivity, matching medical services with community needs and updating the charge master to reflect market prices.

Accounting staffer Morgan Head urged the community to resist blame, accept accountability and focus on fixing the problems.

“The fact remains we are all in some way responsible for the situation we are in,” she said, including “community members who go elsewhere for services. It is time to step up and fix the problems together.”

Medical professionals in the crowd predicted a “domino effect” for health care services overall in the community if the hospital did not recover; for example, impacts to nursing homes and home health services.

Cortez Mayor Karen Sheek urged the boards to hold a community forum to further lay out the recovery plan or risk letting the rumor mill on social media scare away patients.

“The community is concerned. Don’t let Facebook shape the impressions of this facility,” Sheek said. “Don’t let someone else tell the story. We all make mistakes, and the only way to fix it is to be transparent.”

With the help from a taxpayer-approved sales tax in 2014, Southwest Memorial recently completed a $32 million expansion project to replace aging facilities and to stay competitive, officials said. The upgraded campus includes a new, modern patient wing, new birthing center, a new medical office building that consolidates local health clinics, retail pharmacy and a new EMS facility.

But the celebration has been muted in the midst of the financial crisis, officials said.

“We need to do a better job of telling our story,” Deshayes said. “We’re seeing small, incremental improvements and have built a new facility that will provide great patient care for years and years to come.”

The SHS board of directors is composed of chairman Deshayes, vice chairman Steve Fusco, secretary/treasurer Tom Rice, and directors Scott Steeves, Terry Cook, Kyle Cruzan and Dan Valverde. Directors are appointed by the board at its annual meeting in December. The SHS board meets on the fourth Wednesday of each month at 4 p.m. in the EMS station conference room on the north side of the hospital campus. The next SHS board meeting is Sept. 26.

The MCHD board is composed of secretary Fred DeWitt, Robert Dobry, James Harrell, Joseph Matthews, Gala Pock, William Thompson and Wayt.

Harrell was appointed by the board to a two-year term. Dobry, Matthews, Pock, Thompson and Wayt were deemed elected in May after no candidate stepped up to run against them, and the election was canceled, according to the Colorado Department of Local Affairs’ website.

DeWitt was appointed to a four-year term in 2016, he said, although the DOLA website hasn’t recorded his oath of office or new term.

The MCHD board meets the second Wednesday of every month at 6 p.m. at the EMS building conference room on the north side of the hospital campus. Its next meeting is scheduled for Sept. 12.