Natchez Regional facing drastic changes
Published Wednesday, February 27, 2008
NATCHEZ — Natchez Regional Medical Center faces massive debt and an uncertain future, but hospital board attorney Walter Brown said he does not believe the facility will close.
However, bankruptcy, lease or sale of the facility or conversion to a non-profit entity are possible solutions to the hospital’s financial problems.
On Tuesday, the Natchez Regional Hospital Board of Trustees met, behind closed doors, with the Adams County Board of Supervisors to discuss the financial situation of the hospital.
The hospital is owned by the county, but administered by a board of trustees, members of which are appointed by the county supervisors.
Management changes
Photo by Marcus Frazier
Natchez Regional Hospital Board of Trustees attorney Walter Brown stands by as board Chairman Dan Bland speaks at the start of a meeting between the hospital’s board and Adams County Board of Supervisors Tuesday morning at Natchez Regional Hospital. The meeting was closed to the general public soon after.
Chairman of the board of trustees Dan Bland said Tuesday night that the board voted on the fate of the hospital’s management contract with Quorum Health Resources, a Brentwood, Tenn., management firm.
Quorum has managed Natchez Regional for the county since 1992.
“We had a unanimous vote to get rid of them,” Bland said. “We billed out $113 million in business last year and only collected on 46 percent of that.”
While the hospital board legally met in executive session, the supervisors did not enter executive session before the meeting and thus met while violating the state’s open meetings law.
Select physicians and staff members from the hospital were also present at the meeting.
Bland said it would likely take 60 days for the hospital and Quorum to officially separate.
Serious problems
Financial problems are nothing new to Natchez Regional in recent years.
Last year, prior to a full understanding of the depth of collections problems, NRMC announced it had earned its first profit since 2000. The years just prior to 2000 were largely unprofitable, too.
Write-offs for unpaid medical care have wiped out the reported profit from last year.
Bland said residents need to realize the problems facing the hospital are steep.
“Whenever you’re broke, it’s got to hurt,” he said. “In the month of March, we’ve got three payrolls (the hospital pays on two week cycles and the calendar dictates three pay dates in the month). Each payroll is about $600,000. You’re looking at $1.8 million coming due. Also, at the end of March, we’ve got a $1 million note due for money we borrowed to keep afloat.”
Bland said despite the problems, the hospital has worked hard to keep payments current.
“We’ve never been late on a payroll and we’ve never missed a bond payment,” he said.
Open to options
Brown recommended a consulting firm that deals primarily with the healthcare industry be brought in to give the hospital a set of options.
Regional’s CEO Jeff Wesselman said the hospital is open to any solution to its problems.
“We’re not ruling out anything now,” he said
Brown said the hospital cannot continue to operate the way it has without an increase of revenue or patients.
“This is not a time for panic,” Brown said.
But Brown said it is definitely a time for change.
Brown said the hospital board is considering reductions in staff and looking for a way to cut expenses, but he could not provide specifics on how that would happen.
Cuts in expenses might be difficult to come by since Brown said the hospital has several outstanding accounts with multiple vendors.
Outstanding debts have not impacted the hospital’s ability to treat patients, Brown said.
Prescription for change
Changes ahead for the hospital are inevitable, Bland said, and are something all close to the hospital wish were not necessary.
“(Members of the board of trustees) get $40 a month (in compensation). I probably spend 80 hours a month out there,” he said. “I’m a $40 a month guy who still lives in this town. I don’t want to do this. But somebody’s got to step to the plate and be honest.
“I do love the hospital and I want it to make it,” Bland said.
Brown said several factors contributed to the current financial situation.
“There is no one reason,” he said.
Brown said competition from several other healthcare facilities in the area combined with Regional’s high cost of pension payouts and ever-changing issues with federal programs, among other things, have worked against the hospital
“It’s a very complex issue,” he said.
In addition, $8 million, not $7.5 million as previously reported, in uncompensated care have put a financial squeeze on the hospital.
Brown said specialty healthcare facilities in the area are an additional source of hardship for the hospital.
Those facilities can essentially “cherry pick” a clientele most apt to pay their medical bills, leaving many indigent patients turning to Natchez Regional, Brown said.
And the full culmination of all these factors may not even be fully realized.
Brown said the hospital would have to restate its earnings for 2007, in which the hospital previously reported a profit.
Brown said he fully expects the new figures to reveal a loss.
How much of a loss is unknown.
The new financial statement will not be ready until mid-April.
While no specific date is set for the hospital board to have a decided course of action, Brown said the board must act soon.
Kevin Cooper contributed to this article.