After two years of financial troubles, Moab Regional Hospital (MRH) has been recognized by the National Rural Health Resource Center (NRHRC) for outstanding work in demonstrating a successful financial turnaround.
The NRHRC is a nonprofit organization dedicated to sustaining and improving healthcare in rural communities. Along with the Federal Office of Rural Health, it established the Critical Access Hospital Recognition Certificate, which MRH was awarded. The award is intended to recognize innovation and successful strategies in critical access hospitals (CAH) throughout the country. This year, MRH was one of only two CAHs nationwide chosen for the honor.
“We put together a list of ten financial indicators that the NRHRC thought were important to look at when evaluating a rural hospital’s health,” said Jennifer Sadoff, MRH’s director of community relations and marketing. “So basically, we put together a picture of where we were in December 2011, December 2012 and December 2013, and the numbers pretty much spoke for themselves.”
The hospital’s operating margin in December 2011 was a dismal negative 5.7 percent; in December of 2013, that number had climbed to 6 percent.
“For a critical access hospital, in 2012 the average operating margin was 1.59 percent,” Sadoff said. “So we are really doing well in terms of our revenue to spending.”
Closure of rural hospitals can be devastating to rural and frontier communities, denying local citizens timely access to emergency, inpatient, outpatient, long-term care and sometimes even ambulance services, said Sally Buck, Chief Executive Officer at the NRHRC.
The possibility of closure was inconceivable with the completion of MRH’s new hospital facilities in 2011. Yet, in early 2012, the hospital was in a severe financial crisis, with less than one day of cash on hand and accounts receivable at over 100 days past due.
MRH’s financial challenges began in 2011 with the move into its new facility. The hospital had a higher-than-expected influx of patients, but did not yet have the systems in place to handle the increase in business.
“We got behind in our billing,” then CEO Roy Barraclough told the Moab Sun News in 2012. “We got behind in our collections. And we started to suffer from a reduced cash flow.”
Its financial difficulties were compounded by technicalities and changes in legislation to the Disproportionate Share Hospital (DSH) program, which financially assists hospitals that provide a large amount of uncompensated care to their community.
Cash reserves were so depleted that, in May of 2012, the hospital had to choose between paying payroll or paying its mortgage. They chose payroll, which prompted the Department of Housing and Urban Development (HUD), the guarantor of MRH’s loan, to step in and begin working with the hospital board and administration on a financial turn-around plan.
“We literally started the turn-around probably within about a week of getting the news,” said Mike Bynum, MRH’s board of directors chairman. “We got some excellent, outside expertise and advice from our auditors, Eide Bailly. They were on the scene right away and started helping us identify areas to work on and deal with.”
The hospitals turn-around strategy involved a combination of approaches, community help, and a lot of teamwork.
“Everybody from Roy (Barraclough) to the staff and nurses and doctors were absolutely committed to making things right,” Bynum said. “It was kind of an amazing effort by the entire hospital staff and they absolutely are part of the reason that we got everything done.”
Many employees, especially in departments that couldn’t recruit new people at the time, had to work harder while also trying to streamline their operations.
“Employees gave up their retirement contribution; wages were frozen,” Sadoff said. “They were looking for ways to make sure the quality stayed consistent, but our expenses were reduced, and they made it happen.”
Improvements in the hospital’s operational procedures and business arrangements, such as renegotiating contracts with insurance companies, also made big differences.
“Some of our insurance rates had not been renegotiated in quite some time,” Sadoff said. “There were payers that were paying 60 percent of what the cost of providing care was. That made a substantial difference in our financial situation.”
The hospital established an in-house Medicaid-eligibility worker to facilitate Medicaid sign-up for uninsured, low-income patients. Previously, the bills for patients who qualified for Medicaid but were not signed up for program, languished at the hospital unpaid.
By having an eligibility worker in the hospital, it’s one less step toward getting them signed up, and one step closer to getting the Medicaid reimbursement, Sadoff said.
“One of the biggest changes was just being able to continue to get the DSH payments,” Sadoff said. “It doesn’t even begin to fully cover the uncompensated care we give away but it is at least a huge step towards it.”
In 2013, MRH closed the year with $4.9 million in uncompensated care given mostly to Grand County residents. The DSH program reimbursed the hospital for $2.2 million of that.
To get the DSH funds, the hospital needs to procure one-third matching funds—or “seed money”—from a local source.
“It’s definitely a challenge we will face every year,” Sadoff said.
In 2012, the City of Moab and Grand County donated $277,000 of seed money. In 2013, the Canyonlands Health Care Special Service District gave MRH $240,000 – money that came from oil and gas lease-payments the county had allocated to the healthcare district. Other contributions came from private donors.
“We really do have to thank the city and the county and the donors that stepped up to provide the seed money,” Sadoff said. “There’s no way we could have done it without their help.”
The hospital also continued to expand its services for the community with its visiting physician program, which has been a win-win for the hospital’s revenue and the community, Sadoff said.
“Rather than people having to drive to Grand Junction or Salt Lake or Price, the doctor will come here and see patients,” she said. “It’s allowed us to capture some revenue on some procedures and surgeries.”
With that revenue, the hospital has been able to put money into its depreciation fund for future needed repairs, buy capital equipment it had held off purchasing, and look to expanding its visiting-physician program.
“When you want to bring in a gynecologist or you want to expand that service, it’s not just a matter of finding somebody who wants to come here, there’s usually $50-to-100 thousand worth of equipment they want the hospital to buy,” Sadoff said.
Although the hospital is in the black, “it’s not like we’re living the high life,” Sadoff said.
“We want to do the things that will help move us forward as an institution, but we’re still keeping a close eye on everything,” she said.
MRH one of two facilities nationwide to earn Critical Access Hospital Recognition Certificate
“Everybody from Roy [Barraclough] to the staff and nurses and doctors were absolutely committed to making things right. It was kind of an amazing effort by the entire hospital staff and they absolutely are part of the reason that we got everything done.”