|Roche tells county council what happened at WCMH|
|Wednesday, 12 August 2009 00:00|
Joe Roche, Interim Chief Executive Officer of Washington County Memorial Hospital (WCMH), addressed the council giving a chronological overview of how WCMH came to the point of seeking Chapter 11 bankruptcy protection in June.
According to Roche, no one incident or decision brought about the demise of the hospital but rather a series of ill-advised decisions along with changes in the overall economy and the healthcare industry.
Roche began his explanation with the separation from Jewish Hospital by WCMH. Roche explained that the leadership of the hospital became convinced that it could function at a more profitable level as a stand along institution. Roche noted that this was probably the first error in judgment. Roche went on to say that the purchasing power and negotiating strength of a larger healthcare organization is almost always greater than that of a small independent hospital.
Other decisions necessitated by the separation from Jewish involved new computer systems and the hiring of additional personnel such as an anesthesiologist at an annual salary and bonus of $800,000.
Roche explained that during an eighteen month period, problems with converting to the new computer system brought billing for services to a virtual standstill. Coupled with expenses averaging around $1 million per month, it didn't take long to deplete a $7 million cash reserve and to go through an additional $3 million borrowed from a local financial institution with the accounts receivable used as collateral. By the time that the bills were finally sent out, most were not collectible.
Roche told the council that, contrary to most businesses or even most hospitals, when it comes to running critical access facilities, bigger is not more profitable. According to Roche government reimbursement under the critical access program allows for only certain services to be provided to the community. Any services not approved by Medicare are at the expense of the healthcare institution. In other words, WCMH tried to offer too many services for it to support financially.
Although he did not come out and say it directly, Roche clearly implied that hospital leadership was slow to react to a worsening financial situation, believing that things would eventually get better even though the evidence ran counter to that belief.
Confirming Roche's implication is a quote from the July 29 bankruptcy hearing in New Albany in which Michael Hile, bankruptcy attorney for Critical Access Health Services said, “It was clear within a couple of years (after separating from Jewish) that the stand alone model was not working. Still, the leadership hoped that things would improve.”
Roche went on to say that Saint Vincent Health (SVH) operates seven critical access hospitals in their system. “At times, critical access hospitals can be more difficult to manage than some of SVH's facilities with hundreds of beds.” commented Roche.
Critical access hospitals are limited to a total of 25 beds that qualify for federal reimbursement.
Overall, the council seemed satisfied with Roche's explanation of how WCMH came to be in this dilemma. Last month, the council called for a review of the hospital's finances by the Indiana State Board of Accounts. As of the writing of that story, no formal request for the review has been filed with the state.
In other business the council took the following action:
Heard information on plans to streamline Emergency Medical Service for the county
Heard request to help fund Washington County SOAR (adult literacy program) in the amount of $13K
Heard from Washington County Coroner Rondale Brishaber with concerns about transporting bodies for autopsy with the reduction in ambulance service to the county
Unanimous approval of a request by Judge Frank Newkirk to submit the county's drug and alcohol program to the state for approval
With no further business to conduct, the council adjourned until August 10 when it begins the annual budget review process.
|Last Updated on Wednesday, 12 August 2009 09:26|