Northern Inyo Healthcare District press releases

Faced with aging equipment, rising supply costs and the undetermined price of a union wage package, Northern Inyo Healthcare District administration sought counsel from its Board of Trustees as to how to fill a $2.2 million gap in its projected 2016-2017 budget.

Weighing their concerns about price increases against the reality of cost hikes in goods and services, the trustees eventually told Chief Executive Officer Kevin S. Flanigan, MD MBA, to look at a three percent price increase, a first in three years. The board also urged the CEO to try and find any possible savings within the district’s expenses.

The trustees will finalize the budget during their regularly scheduled June 15 meeting.

Dr. Flanigan laid out the options facing the district during Wednesday night’s board meeting. Projected inpatient service revenue, or monies received from routine inpatient services such as laboratory testing, x-rays, and in-room care plus some surgeries, is estimated to be almost $43 million in charges.

Outpatient service revenue, or monies received from NIHD’s specialty clinics and outpatient surgeries, mammograms, rehabilitative services and such, is projected to be just shy of $86 million in charges.

Dr. Flanigan said the district would expect almost $129 million in charges. “I highlight the word charges because every insurer has a contract,” Dr. Flanigan explained. “So, we charge X and they only pay us M. It’s about a 40 percent gap between what we charge and what we receive.”

With estimated deductions of nearly $53 million, income is projected to be just over $76 million.

As Dr. Flanigan led the trustees through the issues, he noted that the expenses were the best projections the staff could determine. “This is our best guess on what healthcare premiums will do,” he said. “It’s what are we looking at for supply purchases. On average supply increases will be about a three percent for the year, but there are some areas where the increases are 30 or 40 percent. All of that is built into our expense projection.”

Earlier efforts to reissue the district’s existing bond debts did successfully reduce taxpayer obligation and length of payments.

“The cost to taxpayers is only $860,000, down from just over $1 million,” Dr. Flanigan explained. “That is real savings from when we reissued and refinanced the bonds. It is a drop of more than $100,000 in total cost this year, and we’re shrinking the term of the bonds by approximately three years.

“Without any changes, sticking with projected expenses and revenue, which does include some increased utilization of services and looks at the trends, we have just over a $2.2 million deficit in real money,” Dr. Flanigan said. “That’s after we’ve removed money we’re not going to get against our charges.” He noted the projections did not include the union contract costs as negotiations are still under way.

Dr. Flanigan presented possible solutions to the board, including the high-risk option of offsetting the deficit by using the district’s 84-days of cash on hand. This would affect the district’s bond rating and put its financial state in danger. Other options included attempting additional budget cuts, which Dr. Flanigan said had been made, or considering a three percent price increase. The last price increase was three years ago.

“When leadership first asked our managers for expense projections, which typically run between $3.5 and $3.7 million in capital requests, the projections came in just shy of $7 million,” he reported. Continued work by hospital executives reduced the requests to about $4.4 million.

The CEO attributes the dramatic change to a new approach by administration. If equipment fails or requires upgrades, and funds are not budgeted, managers are asked to find the replacement costs within their existing budgets. “People are asking for things they think or know they’re going to need coming up so they won’t have to make that tradeoff next year,” he said.

Dr. Flanigan said much of the equipment bought for the new hospital in 2012 was reaching the end of its lifecycle and lease. “We’re not yet having all of our major purchases staggered so that there is always something, but not everything, that we have to purchase,” he said.
Dr. Flanigan, Chief of Fiscal Services Carrie Peterson, and the executive team revamped the timeline for preparing the district budget. “More often than not the final budget was presented to the board on a one-time basis in June when the fiscal year starts July 1,” Dr. Flanigan explained. “We’ve worked very hard with the department managers to shift the time frame backward, so we have the opportunity to give the board a chance to review the projections and give us their collective guidance.”

Personnel changes, other NIHD news

A season of change has settled over Northern Inyo Healthcare District with switches in some leadership, as reported at Wednesday night’s Board of Trustees meeting.

Chief Nursing Officer Kathy Decker, who served at NIHD for almost four years, is leaving the facility as of May 20.

Tracy Aspel, who oversees four different nursing divisions, will serve as Acting Chief Nursing Officer. Aspel is best known to the community for her years of service as the Director of Nursing for the Rural Health Clinic.

A nationwide search for a qualified permanent Chief Nursing Officer is underway and estimated to take three to four months. Decker, a traveling nurse executive, will return to her home in Nebraska before resuming her career at another healthcare facility.

“Kathy has served us very well,” said Kevin S. Flanigan, MD MBA, NIHD’s Chief Executive Officer. Listing Decker’s many achievements, Dr. Flanigan noted the role Decker played in encouraging many of NIHD’s nurses to continue their education and ultimately offer improved patient care to the community. “I would tell you that in and of itself is Kathy’s greatest achievement,” he said. “Her engagement will have a lasting effect on our communities.”

Also, NIHD is welcoming Raychel Hosch, new Director of Rehabilitative Services. Hosch comes to Bishop from New Mexico. With only a few days on the job, Horch told the trustees she already feels she knows what challenges face her and what the positive aspects of the department are. “I see a lot of potential for growth and a lot of things we can accomplish together,” Hosch said.

Dr. Mark Robinson, NIHD’s Chief of Staff, announced the election of Dr. Allison Robinson to the post of Chief of Surgery. Dr. Allison Robinson, a retired U.S. Navy Captain, is double Board certified in General Surgery with specialization in Colon and Rectal Surgery. Previously, she served as a Staff Surgeon at the Naval Medical Center in San Diego.

Trustees also were presented a reading of a lengthy list of employees who completed educational degrees and programs. They are Lucia Niepagen, Michelle Schwartzkopf, Margo Lella, Rebeca Luna, Julie Carter, Lindsey Hughes, Brook Haverstock, Kristen Bernasconi, Elizabeth Field, Julie Laliberte, Cheryle Aguilar, Shira Crook, Brandy Park, Sulema Rico De Talamantes, Deborah Saldivar-DelFante and Lucy Santana.

In other NIHD news, Dr. Flanigan said Letters of Offer were sent to two physicians interested in practicing at NIHD. Hopefully, Dr. Manish Pandaya, who grew up in Bishop, and his wife, Dr. Shruti Ramakrishna, will sign on as a hospitalist and family practice provider, respectively. Dr. Sarah Zuger, offered a family practice position, has accepted and will arrive this Fall.

In a related topic, Dr. Flanigan spoke before the State Legislature for a second time on AB2024. The bill, sponsored by Assemblyman Jim Wood would allow critical access hospitals in California to employ physicians directly. Currently, only California and Texas prohibit such a relationship.

Dr. Flanigan first spoke before the Assembly’s Committee on Business and Professions and then most recently to the Senate’s Standing Committee on Business, Professions and Economic Development.

Typically, speakers are allocated two to three minutes for their remarks. NIHD’s CEO had 10 minutes to present a case on behalf of the Association of California Healthcare Districts.

“It was quite an honor to speak,” he said. “At this point, there is a good feeling the bill will come out of Senate committee with a unanimous or near-unanimous support. It’s been through both subcommittees on the Assembly side with unanimous support and should be headed to the Legislative Floor for vote quite soon.”

Assemblyman Wood recently told The Ukiah Daily Journal that rural California is facing a healthcare crisis. “Rural California has one physician for every 3,500 people, and the average age of that one physician is 60. It is crucial that we find ways to convince physicians to practice in our small towns.”

Wood cited a 2015 physician’s hiring survey which indicated that 92 percent of final-year medical residents would prefer employment with a salary versus working independently.

“Unfortunately, in our rural communities it can be extremely challenging for physicians to make it,” Wood said. “It is a daunting task for young physicians, who are often tens of thousands of dollars in debt, to move to a small town and build a practice from the ground up.”


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