Hospital hopes cuts will stop financial bleeding

Ashland Community Hospital officials are hopeful that cuts and changes at the hospital will help put it back in the black this fiscal year after the hospital had a $1.5 million loss on operations last fiscal year.

Operating expenses for the fiscal year that closed on June 30 were $50.5 million, compared to net patient revenue of $49 million, ACH Chief Executive Officer Mark Marchetti reported to the Ashland City Council earlier this summer.

Formerly operated by the city, the hospital became independent years ago but staff and board members still give annual reports to the City Council.

The results of an audit that will provide updated figures may show the hospital actually lost less than $1.5 million, but the changes will not be enough to push the budget into positive territory, Marchetti said in an interview.

The hospital continues to suffer financially from low Medicare reimbursement rates and the inability of some patients to pay their bills.

The hospital provided $9.4 million in uncompensated care in its 2008-2009 fiscal year. That amount included a $5.3 million shortfall in Medicare payments, $2.7 million in bad debt write-offs and $1.4 million in charity care, according to hospital officials' annual report to the City Council.

The $9.4 million in uncompensated care provided in the past fiscal year compares to an $8.4 million figure for the 2007-2008 fiscal year, and a $6.3 million figure for uncompensated care in the 2006-2007 fiscal year.

"When I started here in 2004, the percentage of revenue from Medicare was about 40 to 41 percent. Now it's close to 50 percent," Marchetti said.

He added, "Medicare is not a particularly good payer. It's reflective of what's happening in our community. We are a community of retirees. Even though they are often young retirees, eventually they become Medicare retirees."

Compounding the hospital's financial struggles, some patients face challenges paying their medical bills because of the economic recession, Marchetti said.

In order to cut costs, hospital staffing was reduced by the equivalent of 40 full-time employees, a wage freeze went into effect and the hospital eliminated its match to employees' retirement plans, the annual report said.

The number of employees per patient day was cut from the equivalent of nine full-time employees to six employees, the report said.

Those job cuts hit a range of people, from housekeepers to nurses to registration staff, Marchetti said.

He said hospital officials have been careful to preserve a good nurse-to-patient ratio compared to industry norms.

Ratios vary by hospital department, but are at one nurse per four patients in the general surgical unit. One to two nurses can be on duty for each patient in intensive care, Marchetti said.

"We're careful we have enough staffing to take care of patients, but not too many," he said.

A nurse who agreed to talk to the Tidings on condition of anonymity said the patient-to-nurse ratio is still good, but there are fewer support staff members.

"I don't think it's impacting patient care as much as it is morale," she said, but added that the medical care staff remain "incredibly committed."

"They will always put patients first," she said.

Hospital staff members are trying to do more work with fewer people, while also dealing with the wage freeze and cuts to benefits, she said.

"I think the Ashland hospital still provides and always has provided excellent and very safe patient care. It's hard on the staff because the staff is bearing the burden of the cuts," she said.

Marchetti said that the budget issues and the general climate for the health care industry have proven to be challenging.

"People who work in the hospital do so because they believe it's good and worthwhile work," he said. "But it's frustrating because it never seems to get any better. We're chasing a moving target to do more and more with less. Unfortunately, that's the environment we're in, and I think people understand that. We need to be efficient without sacrificing quality."

Other cuts at the hospital have included closing the Outpatient Physical Therapy service and the Memory Care Center, which provided day care for people with memory loss.

Spending on supplies went down and use of outside employees dropped.

Marchetti said some changes have actually benefited patients, such as a reduction in registration wait time and a past move to a system where patients can order what food they want, when they want it.

That cut down on food waste in the kitchen and in patient rooms, he said.

The hospital made moves to increase bill collections. Average days of revenue in accounts receivable fell from a high of 85 days to 60 days, the annual report said.

Hospital staff also cut "avoidable patient account write-offs" by 80 percent.

Marchetti explained that the hospital can be denied payment for something like a diagnosis medical code on paperwork not matching up with the treatment code. Making sure that codes are right, documentation is in order and billing is done in a timely manner means the hospital is getting paid more often for the services it provides, rather than having to write off accounts, Marchetti said.

The hospital incurred $2.5 million in consulting fees and restructuring costs to trim the budget, the annual report said.

The hospital's board of directors approved a $46 million budget for operating expenses for this fiscal year, down from the $50.5 million spent on operations for the past fiscal year.

Hospital officials hope to have a 3 percent positive operating margin for this fiscal year, the report said.

Staff writer Vickie Aldous can be reached at 479-8199 or

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