Archived Story

Hospital management ineffective?

Published 12:02am Sunday, September 22, 2013

All eyes are now on Natchez Regional Medical Center as the county considers the sale of the more than 50-year-old county hospital.

The latest sales attempt began in April when a prospective buyer approached county supervisors and asked, “Is it for sale?”

Supervisors saw dollar signs in a prospective sale. In April, Supervisor Mike Lazarus guessed that selling the public hospital to a private, tax-paying entity would net the county approximately $300,000 to $400,000 per year — not to mention the sales price. As the process continued, supervisors committed to spend the first year or two worth of potential property tax by hiring a consulting firm to facilitate the sale.

But, if a non-profit buys the facility the county gets its upfront cash and no ongoing stream of funds from property tax.

So it’s puzzling that the hospital’s sales consultant, Healthcare Management Partners opted to exclude for-profit hospitals from the first elaborate stalking horse bidder process they received special permission to use. It would seem they’re gambling. They hope a non-profit stalking horse bidder goads the owner of crosstown rival Natchez Community Hospital to pay much more to buy NRMC.

More interesting is the feasibility study required as part of the process necessary to sell a county-owned facility.

Information in the 25-page study seems to paint the hospital’s board and administration in not-so-brilliant light.

The financial review section indicates the hospital had a nearly $7 million deficit between revenue and expenditures in fiscal year 2008. That’s when the hospital had to fix the financial flaws created by its former management company, Quorum Health Resources.

The following year the hospital had $406,183 more in revenue than expenses and a deficit of $71,375 in fiscal year 2010 before bouncing back positive in fiscal year 2011 with $326,491 more in revenue than expenses.

Fiscal year 2012 was ugly with a $1.07 million deficit. But it seems to be getting worse. For the first seven months of the fiscal year 2013, the hospital reported having already had $1.86 million less in revenue than expenses.

Because information from the hospital — particularly financial information — is more tightly held than America’s nuclear secrets, it’s not entirely clear what may have contributed to the huge loss in the first seven months of the fiscal year. Perhaps several one-time expenses were at play. If that seven-month trend continues for the remainder of the fiscal year, the hospital would show $3.12 million less revenue than expenses. Even if the losses are half as much when you factor out any one-time expenses, the problem must include poor management.

Millions of dollars in losses are not something that can be blamed on Obamacare. It clearly points to management. The hospital’s occupancy rate — less than 22 percent for 2012 — is far below what the feasibility report indicates are industry standards. So, is the hospital still staffed for much higher occupancy rates in hopes they materialize?

The perception of the medical staff interviewed for the report — suggested the hospital’s problems may extend beyond the management and into the hospital board, too.

“Specifically they (the physicians interviewed) were concerned that the current board structure does not have a membership which has the necessary experience and expertise to guide the Hospital toward success,” the feasibility study reads. “They feel because of the layers of management and related political issues the Hospital is very slow to act and is unable to compete successfully.”

That’s not exactly a ringing endorsement for the people apparently leading the charge to sell it.

 

Kevin Cooper is publisher of The Democrat. He can be reached at 601-445-3539 or kevin.cooper@natchezdemocrat.com.