Hospital considers staff cuts

Brewster facility still owes $2.6 million in warrants

— Three Rivers Hospital is reworking its 2014 budget and might lay off 20 percent of its staff.

Commissioners heard a grim report from Chief Executive Officer Bud Hufnagel last Tuesday.

“We’re in a place right now financially where we have to rethink where we’re going,” he said. “We’ve got to have our mess together, quite frankly. We’ve got to be making money every month, or breaking even.”

One week earlier, the hospital released a preliminary $11.3 million budget that projects a $30,000 surplus.

At the end of September the hospital’s net income was nearly $594,000 in the red, according to the most recent finance report issued Oct. 28.

The commissioners agreed to give staff time to put together a new proposal for the Nov. 25 board meeting. If a new plan of action is approved, the changes would be implemented before Jan. 1.

“It’s all about the survival of the hospital and how we can continue to operate, and I think we can do this,” Commissioner Jerry Tretwold said.

“It’s obvious we’ve got serious financial problems, and we have for a long time,” Chairman Dan Webster said.

The hospital is still focused on reducing warrants owed to Okanogan County, which totaled about $2.9 million in September but was paid down to $2.6 million once October’s property tax revenues came in, Chief Financial Officer Bomi Bharucha said.

“The district needs to be profitable in order to survive and pay down its debts – warrants being the largest one,” he said. “Many physicians have left including the latest announcement being Dr. (Joseph) Matel. The district has to adjust its model to be viable. The revised budget will be a further step in that direction. Many models are being considered as a variation to the preliminary budget.”

However, when it comes to determining what amount needs to be cut, Bharucha said, “No magical number exists since it all depends on volume, which we cannot control to a large extent.”

The hospital has been borrowing from the county since 1998, Hufnagel said.

Nearly a dozen physicians have left the area in the past few years and the hospital has been working on bringing more physicians. Two might currently be interested in relocating here, he said.

But further measures will need to be taken to get the hospital district out of the red.

That could include cutting 20 staff members – the hospital has about 103 full-time employees – and looking at restructuring departments and making cuts to obstetrics and other areas that aren’t profitable, such as the respiratory and cardiology department, Healthbeat Fitness Center and Advantage Durable Medical Equipment, both located in downtown Brewster.

He said the hospital may end up combining departments that aren’t financially solvent with those that are.

In a series of community meetings last spring, one request from the limited feedback from residents was to have a 24-hour emergency room.

The state has also added new mandates: To continue as a critical access hospital, Three Rivers and others such as Mid-Valley Hospital in Omak and North Valley Hospital in Tonasket will have to provide acute care beds after Jan. 1.

Three Rivers will also have to keep a physician not just on call for the emergency room, but physically in the building at all times.

Currently, the hospital loses about $1.2 million per year to operate the emergency room, Hufnagel said.

“If you are a critical access hospital in the United States today, you might as well be a deer in a pen on opening day because the federal government is coming after us with a vengeance,” he said.

To mitigate the losses in emergency, the hospital may consider changing the emergency room trauma level to eliminate the need for an on-call surgeon. Other ideas include restructuring the surgery department so any non-emergent procedures are done during the day shift Monday through Friday, and outsourcing laundry services.

Hufnagel estimated the hospital loses at least $2,000 for every baby born, partly because a large number of patients are on Medicaid, which typically pays only about 60 percent of the total cost.

“I think it’s an extremely important service, but the problem is you have to have enough volume to carry it,” he said. “We do great work in there, but at the end of the day it’s costing us money.”

Dr. Keith Hanson expressed concerns with making cuts to or eliminating obstetrics.

“I think a lot of women want to come here to deliver their babies,” he said. “If obstetrics goes away – for some providers, that’s the favorite part of their practice. What are they going to do? Are they going to want to stay?”

Dr. James Wallace said he was drawn to Brewster because of its obstetrics program.

“I think that’s the most important service we provide,” he said.

The hospital is also continuing to look into becoming affiliated with a larger facility to further cut costs by sharing resources. So far, the most promising is the Wenatchee-based Confluence Health, Hufnagel said.

The facilities are exchanging information now. Affiliation could take anywhere from 18 months to two years.

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