NRMC finance committee talks about losses and opportunities

Nevada Daily Mail

"While we have had some significant losses in April and May, I want to make it clear that this is not a permanent situation," said Nevada Regional Medical Center Chief Executive Officer, Kevin Leeper, during Monday's finance committee meeting

This sentiment was echoed by Chief Financial Officer Mike Harbor.

"It's been a tough slog but it will be righted," said Harbor. "We are starting to turn around. And yes, these past few months have not been good ones for the hospital but you have to see the bigger picture. Look at where we've come in the past few years. We had been running multi-million dollar deficits with genuine fears of closing but for two quarters of this year we've been well in the black."

"I confess, the months since January have been eye-opening and not always fun but I can honestly say that we have identified the problem financial areas and are dealing with each one of them," said Leeper.

The month of May saw a loss of $759,214 while 11 months into the current fiscal year, NRMC has lost $1,254,746.

"Our revenues have taken a real hit but by temporarily lowering our salaries and wages we are keeping expenses under control," said Harbor. "While our acute care patient numbers continue to be depressed, we have really struggled with the Behavioral Health Unit."

Since Dr. David Taylor had to go on leave to deal with a serious medical problem of his own, NRMC has struggled to have a psychiatrist for that unit. In May of 2015, that unit generated income of $1,026,996 while last month it generated $660,823.

"And when we don't have a doctor, we can't provide services and capture that revenue stream even though that unit is nearly always full," said Leeper. "That's why I'm so glad to report that Dr. Taylor has come back on a part-time basis and as of July 1, will be with us full time. That's an important fix that's about to occur."

The start of May also saw the departure of Dr. Cameron Crymes, who served as hospitalist.

"This created a two part problem for us," said Leeper. "The simpler problem involved getting people to cover that position. But the replacements created a new problem."

In a normal month, the number of patients that need be transferred from NRMC to other facilities is about 21. Since 2013, the highest number of transfers had been 49. But in May of 2016, 71 patients were transferred.

"Most of them need not have been sent to other facilities, we had the capabilities of treating them right here," said Leeper. "But our hospitalists were unaware of all we can handle and just shipped them out. That was a tremendous amount of revenue lost. Once I became aware of this problem, I personally spoke with the chief of staff at the hospital providing our temporary hospitalists. I followed up with the doctors and all of them were surprised at the equipment we have and the services we provide. So that problem is also well on its way to being turned around."

A third area of revenue loss is related to what is known as the 340B drug pricing program. This allows participating hospitals to obtain discounted prices on covered outpatient drugs from drug manufacturers. The discounted savings are shared between the hospital and pharmacy providing an incentive to participate and a steady stream of income.

According to a May 2015 report to Congress by the Medicare Payment Advisory Committee, "On average, hospitals in the 340B program receive a minimum discount of 22.5 percent."

"The cost savings from this program had been providing the hospital with a fairly steady stream of income, about $30,000 per month," said Leeper. "But lately it's been down to $6,000."

Finance committee member, Bill Denman, asked for an explanation of the program and the cause of the current problems.

"The situation boils down to two problems," said Leeper. "We pay a company a flat monthly fee to manage this program for us including all necessary paper work with the government and pharmacies. But for some reason, they were not properly tracking the eligible prescriptions and failed to notify us until things became rather serious."

"And second, we've had troubles with our primary pharmacy and with some of our local physicians not being in the system and so their prescriptions failed to qualify for the program," explained Leeper. We've changed the company managing our 340B prescriptions and have filed the necessary paperwork for the pharmacy and the doctors. But even once properly registered, there's a three month lag by the feds before they are in their system and we can start to capture savings from those prescriptions."

"That's an 80 percent drop in income and it took far too long to catch this and get on top of the situation," said Denman.

"I can't argue with you, Bill," said Leeper. "I can only underline the steps we've taken to get on top of this and restore that program and income stream."

"As to the refinancing of the bonds which built the hospital's north tower, 13 banks initially expressed interest in the first round," said Harbor. "As bankers have had time to review our financials, four have expressed serious interest and so we are expecting one or more term sheets by the end of this week."

As a document, a term sheet outlines such things as the interest rate and number of years to payoff by which the bank would purchase the bonds.

"We are a classic example of what the Center for Medicare and Medicaid Services has wanted all along," said Leeper. "Many of our patients are not being admitted to the hospital to take care of their problems but are getting their needs met in one of our outpatient clinics. In the last year or so, we have seen record numbers in those clinics. But there's one big problem in all this, one missing ingredient. How is a facility such as ours to support those clinics when the reimbursement rate for a patient at a clinic is so much less than one in our hospital?"

The first capital expenditure request came from the Barone Alzheimer Care Center.

"We've never had a vehicle of our own for transport and the services we've been using can't always provide the needed transport in a timely manner," said Angela Barrett, administrator of Barone Center.

A limit of $35,000 was set for the purchase of a used van with a lift and the motion was unanimously approved.

A survey of copy machines revealed three needing to be replaced. Approval was given for a five-year lease for the needed machines at a cost of $283.80 per month,

Approval was also given for replacing a computer switch in the obstetrics unit and for adding a second one at a cost of $10,827.

The final capital expenditure approved was for purchase of a cleaner for an ultrasound probe at a cost of $12,206.

NRMC began its fiscal year with $4,435,280 in cash while after 11 months, cash stood at $2,107,166.