Curry Health Network - Note from the CEO

November 2011
 

By now you have read the information in the Curry County Reporter about the financial condition of Curry Health District. I want to share with you some additional facts, and more importantly, what we are doing to overcome the challenge. We are certainly not the only Oregon hospital to have financial challenges.

Up and down the Coast our colleague facilities are all reporting declines in admissions and declines in the numbers of clinic business. While we do not know for certain, the high unemployment rate and high numbers of families without health insurance are contributing to this challenge.

However, we face a number of challenges internal to our operations. A recent staffing study by our consulting partner, Quorum Health Resources indicated a number of areas where our staffing can be significantly more efficient. Wage costs are the majority of our expenses within the District, so we need to look to our staffing patterns for the low hanging fruit.

On Monday, November 21 I'll be sending a notice to our employees that we will have a layoff of up to 25 workers, and that we do not know who will be affected until we thoroughly plan this out which will most likely be in January. I want people to be cautious with their spending over the holiday season. Our target is to bring our labor costs to about 36% of net revenue, not the 45%+ that it has been running. Clearly this will be major change in how we do our work, and so our ability to make the needed changes in our work processes has become critical. We believe our re-sizing will gain us about $1.2 million in cost savings over the course of a year.

The second major area of focus is what we call our revenue cycle. The revenue cycle covers every phase of the patient's journey through our system; from registration to getting prior authorizations to capturing charges at the department level, to finalizing the bill and getting it paid by the insurance companies with minimum delay. We feel there is at least an additional $1 million in annual revenue that can be captured. There are losses stemming from inadequate documentation in all areas where our doctors and nurses encounter patients. There are losses stemming from insurance company denials of our bills and additional costs associated with re-billing these claims.

The third area of effort is to control expenses tighter than we have before. This includes making sure as much of our purchases go through AmeriNet, the group purchasing organization where we get better prices than ordering directly from the vendor. It also includes redesigning work processes such as the lab has done by centralizing all non-stat testing to one set of analyzers and one location. This allows those instruments to operate more efficiently and saving around $2,000 per month. We will have to reduce our overtime, premium pay and call backs significantly. We feel there is about $300,000 - $400,000 to be saved through these small but effective expense control efforts.

Curry Health District has been in these conditions before, even to having a “going concern” letter in one of its prior audits (long time ago). If we make these painful changes over the next 2 - 3 months, and keep relentlessly pushing for improving quality, reducing expenses and providing great patient care, we will end 2012 in the black. Our department heads are committed to seeing us through, and all of us acknowledge the sacrifices we will need to make to achieve our goal. Nevertheless, here is our wish for a happy Thanksgiving, and a conservative "Black Friday".

Bill McMillan, MBA FACHE
Chief Executive Officer
Curry Health Network

See June's Note here