Executives from the Juan F. Luis Medical Center presented a mixed report of both dire and promising news to the Senate Committee on Health, Hospitals, Human Services and Veterans’ Affairs on Wednesday.
Sen. Craig Barshinger summarized the tone of the report as “realistic optimism.”
“Some people are optimistic, but they don’t realize things are going to hell in a hand basket,” he joked.
Interim Chief Executive Officer Dr. Kendall Griffith testified that the hospital was in a fiscal emergency and that the hospital’s funds need to be managed carefully to ensure the survival of the institution. He compared their situation to a human body going into shock.
“When the human body goes into shock, it immediately shunts to the core limiting the flow of blood to the extremities in an effort to ensure the survival of crucial organs,” he said.
Griffith said he believed that the crucial organs of the hospital are relationships between patients, physicians and nurses, and that the hospital’s resources should go towards improving the overall quality of care.
Echoing a policy championed by the prior CEO, Jeff Nelson, Griffith said achieving “nursing magnet” status was a long-term goal. This involves staffing the hospital primarily with registered nurses, as opposed to less trained licensed practical nurses, and demonstrating a consistent level of quality care.
Griffith said he believed that once the hospital achieves a reputation for excellence, it will attract patients from other islands and keep many locals from seeking medical service on the mainland.
Griffith said that the hospital was far from reaching its goal of magnet status due in part to staffing shortages and the ongoing review by the Centers for Medicare and Medicaid Services, but that it was something to strive for.
“Can we realistically get it? Yes. Should we try? Yes. However, we must first crawl before we can walk,” he said.
Sen. Clarence Payne raised some objection to the use of the term “magnet” because, he said, in his mind it is inextricably tied to the firing of 84 LPNs and certified nursing assistants last year. He also said it raised concerns for him about privatization and the denial of service to the uninsured.
Griffith said that magnet status simply referred to quality of care and that it had nothing to do with whether a hospital was private or public. He also reassured the senator that it would have no bearing on how the uninsured were treated at the hospital.
Griffith expressed concern for the nurses who were laid off but, in his testimony, he presented evidence that the staff restructuring was achieving many of its goals.
He said much of the $4.2 million the hospital saved in salaries resulting from the layoffs has been used to fund raises for RNs. He said this was a necessary step because nursing salaries in the territory lag behind those on the mainland and, without leveling the playing field, it would remain difficult for the hospital to recruit nurses from abroad and keep locally trained nurses from leaving the territory in search of higher pay.
Chief Financial Officer Deepak Bansal explained to the senators that as the hospital developed a stable staff of local RNs, the hospital would realize savings both through a reduction in overtime and the phasing out of travel nurses, who average $55 per hour in compensation, versus $30 per hour for a staff RN.
Griffith said the hospital had reduced its travel nursing positions to 42 from a high of 69, and that the dip in patient care seen after the layoffs was gradually being alleviated. He said wait times in the ER have dropped to an average of five hours versus nine hours in March 2012.
Wait time to see a physician has also dropped considerably, from 3 hours 50 minutes to 1 hour 30 minutes, over the same timeframe.
Griffith said there was talk of rehiring some of the laid-off nurses, but it would depend on the hospital’s finances. He said the hospital was considering expanding the role of certified nursing assistants in the hospital and briefly mentioned an idea of rehiring some LPNs to care for long-term patients at the Herman Grigg Home for the Aged, though he was quick to add that no agreement had yet been made to do so.
The tone of the hearing darkened somewhat when the senators’ questions turned to financial matters.
Bansal reported that for the last two months the hospital had a negative cash flow, and the institution’s expenses would very likely exceed their Fiscal Year 2013 budget projections.
Bansal said one large contributing factor to this was greater than expected consulting fees connected to the CMS review.
As part of the systems improvement agreement the hospital entered into with CMS in order to maintain its ability to receive reimbursement through the Medicaid and Medicare systems, CMS mandated that JFL hire an independent firm to monitor their compliance with the agreement and ensure the hospital was improving its quality of care.
Bansal said that earlier this year, CMS greatly expanded the role of the third party monitor, resulting in a much higher expense than they had planned for. He testified that currently they are paying the consulting agency Premiere $148,000 a month to stay compliant.
Bansal said the administrative staff of the hospital has been brainstorming ways to lower expenses and he believed they could save almost $1 million a year by eliminating agreements with consultants in other areas of the hospital, including one firm that provides services to the hospital’s pharmacy and a second that provides IT and billing support.
Senator Nereida “Nellie” Rivera-O’Reilly inquired if further layoffs were also being considered as a way to balance the books, and Griffith replied that it had been discussed, but the hospital was hoping to avoid such a step.
The topic of the hospital’s outstanding debt to the Water and Power Authority was also raised during the hearing. Bansal said the hospital used approximately $400,000 of electricity a month and that they were not staying current with their bills. He estimated their current debt to WAPA at approximately $4 million.
In the hospital’s defense, however, he pointed out that other government agencies, including the Bureau of Corrections and the Departments of Justice and Human Services owed JFL approximately $6 million.
“So if they paid up, you could pay up?” Barshinger asked, to which Bansal said they could.
The senators inquired about what they could do, short of a bailout, to help the hospital.
Kye Walker, chair of the JFL board of directors, said the most effective thing they could do would be to fully reimburse the hospital for the free care it provides uninsured residents. She said that in their previous budget, the hospital forecasted an expense of $29 million for unpaid care, but only received $19 million, leaving the institution to absorb the shortfall.
Sen. O’Reilly requested more information about the amount the hospital loses through uninsured care, but none of the senators present made any promises concerning the hospital’s funding.
In other business, representatives from the Department of Health testified on the recent dengue outbreak in the territory and the loss of funding due to the federal sequester.
Health Commissioner Darice Plaskett said the department recently conducted a survey of six schools and found that of 320 students tested, 203 showed signs of having contracted dengue fever sometime in the previous three months. This was a much higher rate than what had been reported to the agency.
Plaskett said one reason for the underreporting may be that not all of the infected realized they had dengue, as some cases are mild or entirely asymptomatic.
Plaskett also told the senators that estimates indicated her agency could lose $893,353 due to federal budget cuts stemming from the sequester, but she was not yet certain which programs would be affected.
She said Health had received emails from the Centers of Disease Control and Prevention and the Health Resources and Services Administration warning the department that cuts were coming, but that they offered few specifics.
Plaskett said she had, in preparation, ordered her program directors to identify the least painful areas to reduce services.
Attending the hearing were committee members Sens. Barshinger, Payne, Kenneth Gittens, Terrence Nelson, Tregenza Roach and Sammuel Sanes. Sen. Alicia “Chuckie” Hansen was absent.
Noncommittee members Sens. O’Reilly and Diane Capehart also attended and participated in questioning.