FCH Board puts operator on notice

After hearing a plea for financial relief from the chairman of the board of the company that operates the hospital, the Fayette County Hospital District Board on Monday agreed to return to that company more than $74,000 each month for five months.

That $74,000 represents the amount that the operator, Heartland Health System Inc., is obligated to pay the district board each month under its operating agreement. Under the conditions agreed to on Monday, Heartland will use that money to help pay for the non-reimbursed charity care it provides to FCH patients.

“This will help considerably,” said Mike Stigler of Louisville, Ky., chairman of the Heartland Health board, which has managed FCH for the past five years. “It will help us with our lenders; it will stabilize what we’re going through.”

Yet, with the agreement, the hospital district board had its own list of stipulations for Heartland.

Bottom line, the district board put Heartland on notice that if the financial performance of the hospital did not improve, the board wanted to have the option to terminate the operating agreement by giving Heartland a six-month notice.

Further, the board said that as Heartland seeks to improve profits, it could not reduce services at the hospital without board approval.

And finally, the board asked Heartland to provide monthly financial reports on its operations – as well as a comprehensive financial report prior to the February meeting of the district board.

“We’re trying to get you through the first quarter,” hospital district board attorney David Oldfield told Heartland officials attending Monday’s meeting. “But we’re going to start looking at our options. The February report is to give the board a chance to get a feel where things are going.”

Though this was not the first time that Heartland had told the FCH District Board of its financial challenges, it was the most dire assessment of the group’s condition.

In fact, Heartland had provided on Monday a letter to the district board outlining the hardships currently facing the company – and many others in the medical field.

“The economic pressure we’re under is considerable,” Stigler said. “The banks are not forgiving.”

He said that the year-to-date projected loss through the end of October at FCH is $413,000. In September alone, the facility lost $93,000. However, after cutbacks in employee hours and some benefits were made in October, the hospital ended the month with a profit of $98,000, according to FCH Administrator Greg Starnes.

“If we can get somewhere in the $200,000 range by the end of December that’s probably the best we can hope for,” Stigler said.

Those deficits are on an annual budget of about $55 million.

Several board members voiced their willingness to help Heartland to some extent, but all had reservations about long-term or deep concessions that could drain the hospital board’s assets and harm the viability of the hospital.

“Beyond (helping Heartland) break even, I don’t feel obligated to help,” said district board member Jim Lay. “I know it’s tough, but to add to your profit, I wouldn’t want to do that.”

“We gave you three months back this year,” said board member Nancy Pryor. “If we do more than that, we need to see a more open look at how you manage the hospital. A lot of money leaves the county. I’m not against helping some, but we can’t deplete our funds or we’d be crippled.”

In his opening statement to the hospital district board, Stigler cited worrysome trends among hospitals nationwide.

“American Hospital Association statistics show that bad debts are up, there is an increase in Medicaid care, elective surgeries are down and there is a drop in in-patient care,” he said.

As a result, he said, 90 percent of hospitals have made reductions, 70 percent of hospitals have reported a decline in their financial condition and 70 percent have cut capital projects.

“Hospitals all across the United States are hurting,” Stigler said. “Here, we have put on hold anything that’s not absolutely necessary. But we’re still not seeing any improvement. If volumes are down, we must adjust our expenses.

“It’s our responsibility. We’re the managers. That’s why we drafted the letter (to the hospital district board) outlining the options available to the board.”

After nearly two hours of discussions on the topic – some of that time without Heartland officials in the room – the hospital board unanimously approved the following:

• A motion to reimburse Heartland for charity care in the amount that Heartland paid to the hospital board for November 2009.

• A motion to reimburse Heartland for charity care in the amount that Heartland will pay the hospital board for the months of December 2009 through March 2010.

When contacted on Wednesday, Starnes said that although Heartland was asking for “longer-term concessions than the board agreed to, it was a good compromise.”

He added: “The board has agree to offer assistance to help Heartland. Now Heartland has to do what’s necessary to weather the storm and continue to look for ways to grow the business. The relationship between the two entities has been good, and we all want it to work.”

In other matters, the district board heard an audit report from Dale Timmermann of Timmermann & Associates. As of June 30, 2009, he said that the district had cash assets of $4.628 million and capital assets of $7.049 million. Total assets are $11.182 million, up about $1 million from last year.

Lay, chairman of the hospital district’s planning committee, reported that the window replacement project is progressing, though not all the windows have been installed yet. Other improvements are being made to the hospital’s heating, ventilation and air-conditioning system.

Dr. Ray Ryan, current chief of medical staff at FCH, expressed concerns about the radiology equipment at the hospital. Starnes responded, saying that the equipment “has been a source of irritation.” He added that, “our radiologists are excellent, but the equipment issues are completely unacceptable.”

Starnes said that the radiology equipment installed three months ago “hasn’t performed well” and said that a proposal from a different company is expected this week. He also said that he is talking with a company that could provide a mobile unit to do digital mammography imaging.

He also reported that an obstetrician and gynecologist physician, Dr. Penny Gozia of Breese, has indicated an interest in holding clinics at the hospital.

And finally, Starnes said that the hospital’s Sleep Disorder Center, which has been using rooms at the Holiday Inn Express, would be moving back to the hospital.

“The program just hasn’t grown like we’d hoped,” he said. “By moving it back to the hospital, we will save $4,100 per month.”

The meeting was adjourned at 10:40 p.m.

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