The Juan F. Luis Medical Center likely would not have been able to meet its payroll obligations for the month of May if it had not laid off 24 employees, hospital executives told the board of directors at its monthly meeting Wednesday evening.
Deepak Bansal, chief financial officer, said that May would be a particularly difficult month for the hospital financially because there will be three pay periods rather than two.
One pay period per month is normally covered by the hospital’s appropriation from the government and funding for the other pay period comes from the hospital’s own accounts. But Bansal said there was deep concern that the hospital would not have sufficient cash to cover the additional pay period without cutting services, so the layoffs were pushed through.
“There was a sense of urgency and we had to make sure something happened quickly,” he said.
The 24 layoffs included 13 graduate nurses, one physician and 10 employees from administration and ancillary services, such as security.
Graduate nurses are nurses who have graduated from a nursing program but have not yet passed their NCLEX examinations, which would certify them as registered nurses.
Griffith explained that graduate nurses can work for up to one year without passing the exam, and that all 13 of the nurses fired had failed to pass the exam within their given timeframe.
He said the hospital would pay $800 apiece for the fired nurses to attend a six-week NCLEX preparatory class at the University of the Virgin Islands and that, upon passing the exam, they would be hired back as RNs.
Griffith and Bansal both said the hospital’s current cash crunch stems from a number of factors. The hospital has had a negative monthly cash flow for the last five months and the governmentwide 5 percent budget cuts have drained $533,000 from its yearly budget.
The hospital is also preparing for significantly higher payroll expenses when the 8 percent cut to government employees’ salaries ends in June.
Griffith made it clear that the layoffs alone would not be enough to alleviate the hospital’s financial woes. He said other cost saving measures were being taken in conjunction as part of a “contingency plan” to save a total of $5 million this year.
Griffith said the layoffs only accounted for $1 million of their goal. Another $3 million in savings will come through reducing the use of locum tenens physicians, nonstaff doctors who fill in at the hospital working short contracts for significantly higher pay than staff physicians.
The final $1 million will come through cuts to contracts with third-party companies. Bansal said this initiative was under way but would take time to complete.
However, he said, one large contract with Inland Northwest Hospital Services, a company that provided billing services for JFL, had already been canceled. Billing duties will be taken over by local staff at the hospital.
Bansal said this move could also boost revenues because many services being provided by the hospital have mistakenly not been billed for. He said the hospital was taking steps to ensure that these oversights were corrected.
“We’re trying to make sure we work better and smarter to pick up any charges that we’re legitimately able to collect on,” he said.
He said that more stringent billing practices had allowed the hospital to collect $70 million over the first six months of this fiscal year, an improvement over last year, and he was hopeful that trend would continue.
In order to boost cash flow in the short term, the board of directors approved a one-month amnesty plan for overdue bills. Patients without insurance who have bills that are at least 6 months overdue will be able to settle their accounts with the hospital for a 40 percent discount if they pay within 30 days.
Bansal said a similar program was offered last year and the hospital was able to collect more than $300,000 from delinquent accounts.
Sen. Alicia Hansen attended the meeting and asked Griffith if this was the last round of layoffs or if more were on the way.
Griffith replied that it would all depend on how much extra revenue the hospital could generate through its new initiatives, how much can be saved elsewhere, and how large the appropriation from the government is.
“We don’t know,” he said. “Right now our intention is not to do anymore but we really can’t say. We have to look at the implications of what this has done. We just don’t know.”
Adding to the uncertainty is $35 million the hospital owes to its vendors, some of which Griffith warned are threatening to reduce services to the hospital if they are not paid.
Despite the revenue generating and cost saving measures, none of the board members or executives expressed any hope of repaying the hospital’s debt without a large cash infusion.
Board Chairwoman Kye Walker said the hospital had been asking the V.I. Legislature for extra funds for debt relief since 2011 but that those requests had gone unfulfilled. She said there was not a realistic chance that the hospital could emerge from debt on its own.
Bansal agreed with this statement. Speaking after the meeting, he said the hospital needed to be adequately compensated by the Legislature for the free care it provides to uninsured residents.
In other news, Griffith announced that the Centers of Medicaid and Medicare Services would soon end its review of the hospital’s hemodialysis unit. CMS found the unit to be in compliance with its correction plan.
The hospital-at-large is still working through a second plan of correction with CMS to alleviate a list of over 190 complaints.
