LIHU’E — Add Mahelona, Kaua’i Veterans and Wilcox to the growing number of U.S. hospitals losing money. Combined, the three lost more than $10 million – about $3.4 million apiece – in the fiscal year that ended June 30. It
LIHU’E — Add Mahelona, Kaua’i Veterans and Wilcox to the growing number of U.S. hospitals losing money.
Combined, the three lost more than $10 million – about $3.4 million apiece – in the fiscal year that ended June 30.
It is a trend afflicting 60 percent of all U.S. hospitals, which when combined with a national nursing shortage is encouraging healthcare administrators to take a variety of steps to, if you’ll excuse the expression, stop the bleeding.
The three Kaua’i hospitals are making moves toward financial self-sustenance.
The Wilcox Health System board of directors today was expected to approve a merger between Wilcox (the hospital and Kaua’i Medical Clinic), Kapi’olani Health, and Straub Clinic and Hospital.
The new entity of Hawai’i Pacific Health will bring millions of dollars in assets, including cash reserves, to better serve Kaua’i, said Dave Patton, Wilcox Health System’s chief executive officer.
“The merger is the best way to provide the financial stability we all desire. If (Wilcox continues) as a free-standing hospital and clinic, our projections indicate we can expect more losses unless we cut positions, salaries and services, and this is not acceptable,” Patton said.
Kaua’i Veterans Memorial Hospital (West Side folks have taken to calling it West Kaua’i Medical Center) is attacking the financial outflow by offering additional services, including eye surgery, operating-room suites, obstetrics and gynecology (including delivering babies), according to Kelley Roberson, chief financial officer of Hawai’i Health Systems Corp. (HHSC).
HHSC operates Samuel Mahelona Memorial Hospital in Kapa’a, and Kaua’i Veterans Memorial in Waimea, as well as community hospitals on four other islands. It is “essential” for the system to become self-sustaining, so the larger, acute-care facilities have enough capital and income to offset losses at the smaller hospitals, Roberson said.
Mahelona has added a walk-in clinic and new services as well, looking for a suitable mix of services which help the HHSC bottom line while addressing community needs, he said.
While the red ink hasn’t dried up at either HHSC facility on Kaua’i, winter is the best time of year for hospitals, and Wilcox could have a profitable month for the first time in several months this quarter, Patton reported.
Despite rumors to the contrary, “Wilcox is not in financial crisis,” Patton said. The system has strong cash reserves, is making payroll and paying other bills, he said.
“We feel that the things we are doing are working, and we’re working collaboratively” with the hospital board, nurses, doctors, other hospital and clinic staff, and the employee unions, Patton emphasized.
The merger will “make the component parts stronger,” allowing more capital for technology and physical plant improvements and expanded clinical offerings, continued Patton.
The merger, if approved, will allow Wilcox to be in a position to not have to worry about layoffs, he added.
“The merger is a very aggressive way of taking care of some problems. The merger is a strategy to turn things around,” he said.
With about 1,000 employees, Wilcox Health System is one of the island’s largest employers.
Kaua’i Veterans Memorial and Wilcox officials recently signed a document called a “network agreement,” according to Patton, which allows the entities to offer island patients a service or services the other doesn’t offer.
Roberson hopes the collaboration continues if the Wilcox merger is consummated.
“We would trust and hope that the outcome of those discussions, whatever it is, will be beneficial to the people of Hawai’i, including the people on the island of Kaua’i,” Roberson said. “And whatever the outcome is, and whatever the organization looks like, we will be more than happy to work with them.” HHSC also has a plan to slow the flow of financial losses, Roberson said.
In fiscal 2000, the combined Kaua’i Veterans Memorial and Mahelona losses were $6.7 million. “We do not accept losing at that level,” Roberson said.
But instead of asking why the hospitals are continually losing so much money, he said he prefers asking, “How is it that we are doing better? I would answer that by saying that the staff and the medical staffs have been working hard to provide quality healthcare, access to care and additional services for the communities that we serve on Kaua’i.
“We’ve already budgeted for a dramatic improvement in those two hospitals in financial performance for this new fiscal year. The budgeted loss for this new fiscal year is right at $5 million, which is a pretty significant percentage improvement.” Through the first quarter of this fiscal year, the two hospitals lost $600,000, which on an annualized basis is better than budgeted, he said.
All hospitals are hurting as a result of federal legislation aimed at reducing healthcare costs by limiting Medicaid and Medicare reimbursements to hospitals, but Kaua’i Veterans Memorial may be feeling the pain more than others, Roberson explained.
A higher percentage of its patients are Medicaid and Medicare recipients than not, and for that reason alone Roberson said he would argue forT the continued need of the facility.
While there are no plans to close it or Mahelona, HHSC does continually evaluate the mix of services “that provides the best financial return while still attending to our responsibility to provide the right mix of services for the communities,” Roberson said.
For the first time in a few years, HHSC will not ask the Legislature in 2001 for an emergency appropriation, he said, adding, “We have our house in order.” And making Kaua’i Veterans Memorial a critical-access hospital, something made possible through an act of Congress this year but not yet in place on paper, will help the facility’s bottom line $1.4 million or more a year from federal reimbursements, he added.
Staff Writer Paul C. Curtis can be reached at pcurtis@pulitzer.net or 245-3681 (ext. 224).
