Facing an ultimatum from the federal Medicare system, the Juan F. Luis Hospital board of trustees Tuesday entered into an agreement that will place the hospital under intense scrutiny for the next three years.
The hospital was inspected last summer by the Centers for Medicare and Medicaid Services, known as CMS, the agency which certifies U.S. medical facilities for meeting required standards of care. JFL failed in 11 of 23 categories.
In October, the hospital was notified that it faced termination from the program if it did not make the necessary fixes by January. The good news is that the hospital is no longer on the termination list, CEO Jeff Nelson told the board Tuesday at its regular meeting.
The "challenging" news, he went on, is that the hospital had to enter an agreement for improvements that places it under the scrutiny of CMS for the next three years. That leaves JFL with no more wiggle room. For the next three years hospital staff has to make continuous improvement, meeting the standards and maintaining those improvements.
"Today is the first day of the rest of our lives," Nelson said, paraphrasing 1960s radical, Emmett Grogan. He then switched references and quoted the movie "Apollo 13" when he told the board, "Failure is not an option."
One slip, one backslide or inspection error, he said, and CMS could instantly revoke the hospital’s right to participate in the Medicare program. That would be devastating for the hospital’s effort to put its faltering financial picture in order.
Nelson also pointed out that improvement has already been made – the hospital is now in violation of only six standards, he said, but even one would be too many. The executive said CMS’s interest in the Juan F. Luis Hospital is the same as a patient’s.
"It’s equal to when any patient walks in the door. He has a set of expectations," Nelson said. "CMS has the same expectations."
But the demand that the hospital improve also runs up against the cold reality of its financial condition. While the board took action Tuesday to help this year’s budget break even – including voting to raise rates beginning March 1 – that does not address the $27 million JFL owes many of its vendors, or the $50 million it owes the government of the U.S. Virgin Islands.
The cost-saving measures unanimously approved Tuesday were:
• Raising rates as of March 1 (he increase could net JFL another $2.3 million a year).
• A voluntary early retirement plan that Nelson said would save the hospital almost half a million dollars this fiscal year and as much as $5 million in the 2013 fiscal year.
• Authorizing the CEO to negotiate the hospital’s entry into a group purchasing organization – such groups make bulk purchases of supplies hospitals use, saving money through bulk – Nelson said such a group could save JFL "not less than $1.4 million a year."
• Increasing wages for registered nurses and creating a "bridge program" that would provide a path for licensed practical nurses to become RNs. According to Nelson, the increased salary would be paid for by reducing the number of traveling nurses the hospital relies on to meet its staffing needs. Paying nurses who live here or want to live here a higher rate would allow the hospital to build its own staff, and would relieve an issue that is often a bone of contention between local nurses and the travelers, who make significantly more money.
The board also voted to look into immediately replacing an electric transfer switch that failed on the hospital’s emergency backup generator. The switch detects when power coming in from WAPA fails and in 10 seconds starts the backup system. Without the automatic switch, someone has to notice that the power has gone out, grab a flashlight, go down to the power room, and start the generator manually.
The delay could cause a serious threat to the hospital’s patients, finance committee chair Wallace Phaire said.
The hospital has about $280,000 budgeted for the project, and hopefully will meet the CMS requirements sooner than later.