City and hospital looking to move forward

While much of the attention on the Nevada city council meetings of July 11 and 18 has focused on the smoking ordinance, another city statute was quietly adopted.

This second ordinance has to do with Nevada Regional Medical Center. Specifically, the ordinance amends Section 2 of the city charter with regard to hospital management contracts.

While owned by the city of Nevada, NRMC is managed by Quorum Health Resources, based near Nashville, Tenn. Up to now contracts with Quorum have been for a period of five years and handled by the hospital board. The fifth such contract expires on Nov. 1.

While notice of non-renewal is required to be given 90-days prior to contract termination, the board asked for and received permission to extend the time for such notice to Sept. 1.

NRMC’s chief executive officer – Kevin Leeper – as well as chief financial officer – Mike Harbor – are Quorum employees, all others are paid by the hospital.

NRMC’s board of directors are nominated by the hospital board and elected by action of the city council. Unlike other city boards and committees, NRMC’s is truly an executive board; in almost every way, it manages the affairs of the hospital.

The just adopted ordinance states that when the financial condition of the hospital or long term care unit (Moore-Few and Barone Care Centers) “has continually reflected losses for a period of three years, the city council may exercise the authority, … after consultation and coordination with the hospital” or long-term care board, to suggest or require the board(s) “effect nonrenewal or such changes in professional management as the city council deems necessary and prudent.”

The Long-term Care Unit is prospering in the number of patients; Barone has been full and Moore-Few nearly so. The LTC is doing well in collecting what it is owed and even has enough cash on hand so it could operate for over six months (200 days plus) without taking in a cent.

But the hospital meets the specific conditions of the ordinance in that its balance sheet “has continually reflected losses for a period of three years.”

Said city attorney, Bill McCaffree, who drafted the actual language of the ordinance, “In no way does the city council want to take over the hospital board’s job rather it just wants to lend a helping hand where needed and only wants to be involved, as evenly as possibly, when and where appropriate.”

Nevada city manager, JD Kehrman, echoed those sentiments stating, “The reason the ordinance is narrowly defined is because the city council has no interest in replacing the hospital board but feels that as things are at this moment, all aspects of hospital management need to be fully reviewed.”

Added Kehrman, “The city council has a great deal of confidence in the hospital board, whose members it appoints. It has no interest in making decisions for that board.”

So what options are the hospital’s board and indirectly the city council looking at?

In a Tuesday interview in his office, Kehrman confirmed that broadly speaking, there are three options.

The first is to continue to have Quorum manage the hospital.

Council’s action on Tuesday would seem to indicate there is little enthusiasm for an unconditional five-year renewal. It is conceivable a contract for a shorter term and with a number of conditions and targets is a possibility.

A second option is to have the city take over and directly manage the hospital, as it did for decades until 25 years ago. But as noted by McCaffree and Kehrman, the city has no interest in taking on general oversight, let alone day-to-day management of the hospital.

Earlier this year, current 28th Judicial Circuit Court Administrator, David Heumader, who previously served as CFO and CEO of what was then known as Nevada City Hospital, said, “Leading the old city hospital was very demanding back then but with the rules now, it’s really tough for hospitals – especially rural hospitals – to make it.”

This leads to a third option: interviewing and hiring another management firm.

To select such a firm requires a certain level of expertise. Some time ago, the city positioned itself to handle such an eventuality by hiring James M. Sneed, a certified public accountant who co-founded a company which specializes in assisting rural hospitals with planning, developing and financial matters.

Kehrman was asked about Sneed and his job of evaluating the hospital’s economic condition, Quorum’s oversight and other options.

“Jim is there to be a resource for the [hospital] board and I and the council would encourage the board to make use of his expertise,” said Kehrman.

In a conversation following the last NRMC board meeting, Steve Russ, board chair, said he is in frequent contact with Sneed. They have conversed about the hospital’s economic struggles and the board’s options.

Since the adopted ordinance makes mention of “consultation and coordination” between the hospital board and city council, Kehrman was asked if such a process has been established.

Responding Tuesday morning, the city manager said, “We first have to see if this [ordinance] passes tonight but I am sure at some point, we will be in touch with the board and see where we go from here.”

This December, the hospital will mark its 80th birthday while next week, Leeper will mark his third anniversary as CEO.

In a prepared statement, Leeper began by noting, “Our Board and the City Council have a joint responsibility to see that this hospital remains a viable service and economic stimulator for this community.”

He pointed out, “it is an extremely complex business to truly understand the process that gets people in our doors in a billable manner, and then to get adequately paid for the services delivered.”

Leeper praised the work of the hospital’s 325 employees and referred to the $8 million loss in the fiscal year just prior to his becoming CEO.

“I cannot fault the city for being discouraged with the length of time the recovery is taking and I actually welcome their interest and hopeful support in coming up with additional attention for our wonderful community asset,” said Leeper. “I know from living this every day since I got here that we are turning this ship towards a position of smoother sailing.”