By Polly Keary, Editor
A lot of things changed for Valley General Hospital last year, but the past continues to haunt it.
In 2013, the hospital entered an affiliation with EvergreenHealth of Kirkland, replaced the CEO and department heads hospital-wide, brought in new doctors, passed a tax levy and started scouring for savings and new revenue.
But a hospital audit completed in January and released this week of the hospital’s 2012 performance warned that the hospital’s financial situation was so dire that it might not be able to survive.
As far as bookkeeping went, the hospital met expectations in 2012, the auditor reported. But there was one significant problem.
“In most areas, the District complies with state laws and relations and its own policies and procedures,” the report said. “However, we identified a condition significant enough to report as a finding: The District’s financial position continues to place it at risk of not meeting its financial obligations or providing services at current levels.”
Since 2009, the hospital has been steadily losing ever greater amounts of money. Losses topped $3 million in 2009 and 2010, and $4 million in 2011 and 2012, when the hospital lost $4,428,758.
Cash reserves have dropped a lot, too, from a high of more than $7 million in 2009 to $2,377,478 in 2012.
The auditor noted that the hospital took a lot of steps in 2013 to address the problems, including affiliating with EvergreenHealth in December of 2012, developing a turnaround plan, passing a permanent levy which will bring in about $2.4 million per year, and subleasing space to Evergreen, which prepaid $1 million for five years’ rent.
Also, high turnover through 2012 troubled the hospital too, the report said.
The audit was foreseeable, said Eric Jensen, who took the helm of the hospital a year ago this month.
“I knew the hospital had challenges when I came here,” he said. “But there were some surprises, too.”
He and his staff learned early in the year that the state had overpaid the hospital for unreimbursed care two years in a row, to the tune of about $850,000 a year. That money has to be repaid.
“It makes our financial statements look really bad,” he said.
In fact, he said, next year’s audit won’t be rosy either. The hospital has been squeaking by, laying off administrative staff and trimming other costs while working out a repayment plan with the state.
The levy money won’t start coming in until April. So, to tide itself over, the hospital took out $1 million in loans from Coastal Community Bank against the levy money.
“I think the important thing for people to understand is that the condition didn’t occur overnight,” Jensen said. “It took years and years to get here, and it’s going to take years to get out of it.”
The hospital is taking a three-pronged approach to recovery, he went on.
The first is to increase revenue. The levy is a big part of that. But other steps include adding a new and lucrative addiction recovery program for pregnant women. And the hospital recently hired a consultant to help them find areas in which the hospital wasn’t billing where it could.
Fairfax Hospital is also working toward an arrangement in which it would lease a wing of the hospital for psychiatric care, meaning the hospital will get not only the rent, but the business generated by patients’ medical needs.
The second prong of the approach is reducing expenses, and that has involved cutting the number of staff at the administrative level, as well as streamlining purchasing and other measures.
Another part of savings might come from Obamacare; about 10 percent of the hospital’s budget is caring for the uninsured. With more people on Medicaid, the hospital administration thinks the hospital could save $1 million this year because people who couldn’t pay before will now be arriving with insurance.
The third piece of the strategy involves leveraging the affiliation with Evergreen.
Part of that includes bringing Evergreen physicians out to Monroe to practice on a part-time to full-time basis. Four new primary care physicians equaling three FTEs have arrived from Evergreen, and a number of part-time specialists are practicing at VGH facilities. There is a new urogynecologist working one day a week and a physiatrist is coming two days per week.
A big part of securing the financial future of the hospital is stabilizing the department head positions.
Since Jensen came on board, there is also a new Chief Clinical Officer, a new Chief Financial Officer, a new controller and a new staff accountant. And recently a medical director of the emergency department arrived, as well.
That should help make sure things like the state overpayment to the hospital won’t go unnoticed, said Jensen.
Fixing the hospital’s financial problems won’t be the work of a single year, Jensen cautioned. But he is optimistic that the hospital is headed in the right direction.
“We are starting to see a light at the end of the tunnel,” he said.