NRMC board hears recommendations to improve financial stability, approves budget

Nevada Daily Mail

The Nevada Regional Medical Center received a report from SOLIC Capital Advisors representatives in a special meeting Tuesday evening, when they also discussed the 2016 budget.

Matthew Caine, a managing director of SOLIC, said they were contacted when NRMC's bond reserve fund dropped below 70 days in the previous fiscal year and then remained below that number, leading to a breach of contract.

Caine said their purpose in their investigation of the hospital was to view and assess NRMC's financial situation and then make suggestions as to what can be done to improve that situation in future fiscal years.

Caine said their research into NRMC's history and current finances showed that the financial troubles seemed to start in 2013, when they finished the fiscal year with a $3.5 million loss. The next year there was an $8 million loss.

Another sign of turmoil was the fact that the hospital had four chief financial officers in just an 18-month time period. In the report, the advisors said stability must be established in the administration in order to help the hospital find stability.

But Caine said improvements have been made at the hospital through the hospitalists program and in the increase in volume.

"Challenges exist for rural hospitals," Caine told the hospital board Tuesday. "And NRMC has some specific problems as well. We want what is best for the community."

Caine said their goal for the community is to make sure the hospital stays running and city-owned if at all possible, but added that goal will not be accomplished with merely a "snap of the fingers," but through hard work and execution on a daily basis.

Caine and other SOLIC representatives gave reports of their findings on areas of the hospital including its revenue cycle, workforce efficiency and the supply chain and purchasing services. Along with each report, they gave recommendations on how to improve in those areas and what new initiatives they can put in place.

For the revenue cycle, the advisors recommended the hospital make improvements by prioritizing automation needs in order to use technology to make work more efficient, utilize contract management software and optimize the cost to collect funding while reducing the denials and uncollectible funds where possible.

They said the workforce efficiency could be improved by developing a workforce monitoring process and managing the labor of the staff in order to keep overtime down. They also advised that the hospital shore up the supply chain operations and look for ways to increase volume.

The SOLIC representatives said attracting that volume to NRMC is key, as the market seems to be shrinking, with patients choosing to go to other hospitals instead. SOLIC representative Christopher Myers said they need to find ways to get referrals from local primary care physicians.

Over recent months, NRMC has reported an increase in volume, boosting their revenue as they near the end of the 2015 fiscal year.

In each of the three separate areas of their report, the SOLIC members set financial benchmarks for the hospital, including the sum of money they could save through conservative and aggressive predictions as well as with a middle-ground prediction in each case.

If the hospital successfully follows all the initiatives SOLIC recommended, the advisors believe they could save between $3.5 and $4.6 million next year, with a target midpoint of $4 million. In interim CFO Mike Harbor's presentation of the budget, he said he included some of those initiatives so the bottom line of the budget is positive.

Chief Executive Officer Kevin Leeper said they were already aware of some of the issues raised by SOLIC but now have a better understanding of what they can do to correct the problems and how much of a difference those changes could make in their financial bottom line.

"We've identified things we know we can do," Leeper said, which in the new budget includes efforts to reduce bad debts, eliminate denials and manage labor to meet the volume demands.

Caine asked that the board spend some time looking over the report, raising any questions or issues they might find, and give them permission to report back to the bond insurers who originally hired them to do the investigation.

The NRMC board of directors also approved the draft of the 2016 budget, which includes a 3 to 4 percent raise in wages in an effort to be more competitive in seeking out medical staff. The board is not yet sure when those raises will be put in place.