Natchez Regional making progress

Published 11:00 pm Saturday, May 9, 2009

NATCHEZ — April was a month of anniversaries for Natchez Regional Medical Center.

It marked the facility’s 50th year in business and the facility’s first full year of operation under the direction of Healthcare Management Partners and CEO Scott Phillips.

And while plans to sell the facility have failed, the effort to make the hospital fiscally sound has been a success, Phillips said.

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“Today it’s looking like a successful county hospital,” Phillips said.

Phillips said since he and his team have arrived at the hospital, efforts to make the hospital run more efficiently, and save money, have been working.

Looking back over the past year, Phillips said the financial problems stifling Regional under its former management group, Quorum Health Resources, did not have to do with a lack of revenue, but a lack of cost control.

“They were spending too much,” Phillips said. “The accounting was woefully deficient.”

Upon his arrival, Phillips began implementing cost saving measures and started working to place the facility in bankruptcy in order to make it a more attractive asset for a potential buyer.

While the sale did not materialize, the hospital has been able to use bankruptcy to its advantage.

While Phillips and his team point to their success in savings, a recent audit of the hospital backed their claims.

The audit, done by the Horne Group, issued an unqualified opinion and recommended no significant changes in accounting policies.

Regional’s Chief Administrating Officer Bruce Buchanan said the audit was great news at the hospital.

“That’s as good as it gets,” Buchanan said of the audit. “A lot of progress has been made in 12-months. The hospital is where it needs to be and can be run for the next 12 months with no problems.”

In the past 12 months, it took a great deal of work to get the hospital where it is today, Phillips said.

However, some of the cost saving measures implemented did include eliminating staff.

When Phillips arrived at Regional the facility had 425 employees.

That staff has been trimmed to 313.

Phillips said overstaffing by QHR had to be corrected for the benefit of the entire hospital.

“It wasn’t their fault the hospital was overstaffed,” Phillips said of the employees.

By eliminating jobs, saving on the salaries and benefits, hospital administrators now project an annual savings of $4 million.

The hospital is also using the benefits of bankruptcy to its advantage in its ongoing efforts to get costs under control.

One of the benefits afforded by the declaration of bankruptcy allows the hospital to renegotiate and eliminate contracts with vendors.

It also allows the hospital the chance to put off paying debts to some creditors if those debts were incurred before the declaration of bankruptcy was made.

Phillips said while some payments are being postponed, any bills generated after the declaration are paid on time and in full.

“We’re not just not paying them,” he said.

Regional’s plan calls for all of their debts to be paid in full in their restructuring plan submitted to the bankruptcy court.

Those debts will be paid with interest.

Phillips said renovating several contracts, with and without bankruptcy, has allowed them to save $3 million annually.

Regional’s Administrative Officer Randy Harrison said some of those contracts included lease agreements for medical equipment.

Now, if possible, the hospital will buy, not lease, equipment, Harrison said.

But not all of the improvements at the hospital have come in the form of cuts or reductions.

Buchanan said in the past year the hospital has made improvements in the accounts receivable department that have drastically shortened the length of time between a bill going out and money coming in.

Last year it took approximately 84 days for money to get back to the hospital, now it’s 38 days.

“That has a huge impact on our cash availability to run the hospital,” Buchanan said.

And when the hospital has cash available to run the facility, they don’t need to borrow money for the day-to-day operations.

In the past year the hospital has paid off $2.6 million on a $3 million dollar existing line of credit with United Mississippi Bank.

Right now the hospital as a zero balance on the credit line.

“We’re very proud of that,” Buchanan said.

The hospital has also been keeping costs down by decreasing the amount of time a patient stays in the hospital.

Last year the average patient’s stay was four days.

Harrison said since most insurers have a standard reimbursement rate on procedures, the hospital can lose money by letting patients stay longer than they need to.

The hospital has shaved half of a day off the average stay — largely by working to make the staff more efficient — to increase savings.

And in March of 2008 the hospital had a $3.2 million operating loss, that’s now been turned around to an $853,000 profit.

Additionally, they had a $1.4 million dollar negative cash flow in the same time period that has been turned into a $760,000 positive cash flow.

Phillips said while he is pleased with the current financial status of the hospital, it did not happen quickly and it did not happen with just his team.

“This took a lot of people a lot of time and hard work,” he said.

Phillips said for the first time in a long time the hospital has management core comprised of Natchez residents that are determined to make the hospital a success.

“We have empowered this staff to make the changes at this facility and that’s what they have been doing,” he said.