Hospital status: Code blue

After all the numbers are crunched and all the belts are tightened, the success of hospital CEO Carl Gerlach’s 2009 budget, which he was to have presented to the hospital board of directors on Wednesday, rests with community.
“Year-to-date,” it says in the budget overview, “the hospital is now reporting net income of $217,291 versus budgeted net income of $539,509, resulting in an unfavorable variance of $322,000.” Without a successful bond measure, Gerlach states up front, the hospital will not be able to make the infrastructure upgrades necessary to the proper functioning of the emergency ward and the hospital that supports it. Unstated, but there loud and clear, is the question of how, without the bond, the hospital can remain viable at all.
Gerlach, whose grim reality coexists with an innate personal optimism, lays out a three-year plan dependent upon the passing of a bond that will finance the infrastructure repairs and upgrades and also provide “working capital replacement needs.” The budget includes modest pay raises for key employees. Nurses and “critical” clinical positions would get six percent, support priority positions five percent; all other positions would get three percent. The salary increases will add up to approximately $1.1 million, and will be offset by management efficiency measures including flexible staffing and reducing management and consultant positions. The budget does not include funds for recruitment, since, until the measure passes and some of the infrastructure problems are corrected, recruitment is not likely to be successful. The key to all is the successful bond.
What will it take to get a successful bond measure passed?
A recent meeting of the Strategic Planning Committee scheduled to discuss the possible purchase of the Carinelli property turned into a forum offering hospital boardmembers and officers a clear, distinct and emphatic message: the public–the 67 percent needed to support a bond measure–still has not been adequately convinced of what the previous measure was for, why it was needed and what property owners would get for their money. The discussion boiled down to land–if Carinelli is the only site, as Bill Boerum stated in his opening presentation, does that mean the hospital must buy it; money–how many times will the people be asked to pay, and what will they get for it; and communication–the board needs to listen and be clear.
Patricia Talbot said, “I’m the homeowner, so where will my money be spent? I need it real clear; if [the bond] is different from the parcel tax, what is it we’re paying for?” One speaker suggested keeping the new construction within the existing facility, to which CEO Carl Gerlach explained that that would be a complex problem, “and complex problems always cost more money.”
Board chair Dick Kirk ventured that hospital economics was one of the most complex systems in the world to explain, involving every level of government, federal, state, county, city, and with overlapping public and private funds, as well as insurance. “Every level of complexity is involved,” he said, “it’s probably the most complex profession that I know about.”
Marilyn Goode offered that the land could be bought and used for a parking lot, but that, “I think there’s still confusion.” Alden Brosseau said, “I don’t like hearing complexity used as an excuse. It’s the job of management to explain things in ways that people can understand. Some of the reasons management doesn’t do that is they’re flinching, truly afraid to be open. But if you’re willing to open the kimono, you can keep things simple and clear.” Gina Cuclis said, “I agree. Most people do not care how complex the hospital business is. Most people care about where will the hospital be and how much is it going to cost, and explain why, in simple terms.”
After a genuinely complex discussion about hospital finances and economics including details around the parcel tax, recruitment, the oncoming “silver tsunami” of “Baby Boomers” and problems with Medicare, Dr. J. Nevin Smith spoke up, waving a sheet of paper. “Look at this thing,” he said. It was the budget. “We’re on life support! You’ve got to get people to get the right kind of insurance.”
Insurance?
Smith waved the paper at Hospital CFO, Jim McSweeney. “If our managed care program were up and running, we wouldn’t be here. The solution is there. People have to support it by buying the kind of insurance that will deal with it. We’ve got to stop fooling around with whether we’re going to buy the Corinalli or whatever it is. Go out and convince people to buy the right insurance!” How, after all, can one support a hospital if one’s insurance policy precludes patronizing it? “The future comes from people buying insurance that can be used here. Simple as that.”
When considering the hospital’s fate, nothing is simple but the question of insurance reveals a whole new layer of financial and personal complexity around what it means on a personal level to support a community hospital. As with buying locally raised food, insurance that would pay for a visit to the community hospital may cost a little more, but buy greater rewards in terms of health, satisfaction, and identity with the community as a whole. A simple concept, but part of a puzzle that is blindingly complex.