The first quarter consolidated financial statements for Phelps County Regional Medical Center, which reflected revenues and expenses on line within the hospital’s budget, was preempted by a discussion on Wednesday evening by members of the Finance Committee with the Board of Trustees on long-term plans for growth at the hospital, including a rough estimate of securing between $50-to-$70 million for capital improvements through the year 2012.


The first quarter consolidated financial statements for Phelps County Regional Medical Center, which reflected revenues and expenses on line within the hospital’s budget, was preempted by a discussion on Wednesday evening by members of the Finance Committee with the Board of Trustees on long-term plans for growth at the hospital, including a rough estimate of securing between $50-to-$70 million for capital improvements through the year 2012.
  With March financial statements revealing the last month in the quarter to be the ninth busiest month ever at PCRMC, resulting in year-to-date, net patient revenues of $37.797 million, and year-to-date expenses of $38.671 million, in addition to a total cash and investments’ fund of $57.397 million, Chief Operating and Financial Officer Jerry Paule focused on a long-term (five-to-seven years) “concept” for capital improvements to the hospital.
  “The board should see that we have a cushion,” Paule said as he suggested methods of funding the improvements.
  The long-term capital improvement initiatives, or the Master Facility Plan, suggested by hospital administrators includes privatizing patient rooms, foremost by adding two, additional floors to the North Tower; new way-finding measures, including the addition of a new lobby to expedite more direct access to major units within the hospital; and upgrading the imaging equipment, for both inpatient and outpatient services.
  The order of preference for the projects within the Master Facility Plan is imaging upgrades, first, private rooms, second, and a way-finding lobby, third.
  With a very “rough estimate” of a $50-to-$70 million price tag for all the improvements officials at the hospital would like to see implemented, Paule suggested four methods by which to attain the funding — generated by operations, investments and related income, increasing debt and fundraising.
  Additionally, Paule offered the Board of Trustees four “models,” or directions of financial growth based upon balance sheet and income statement projections, and asked the board to consider which direction they would recommend, although he did not seek immediate approval by the board for the plan.
  A “Status Quo” position would provide approximately $77.4 million during a five-year period for additional capital assets, but it would only cover one or two of the improvements.
  An “Increased Profitability Model” would generate approximately $89.6 million during a five-year period for some of the improvements, but not all.
  A “Decreased Profitability Model” would add only $60.1 million to the capital improvement budget during a five-year period, but it would generate no money for new technology.
  Finally, in a scenario Paule referred to as “The Whole Enchilada,” the model provided for the hospital to generate $120.6 million for capital expenditures during a five-year period, yet accrue $55 million in additional debt, and it would pay for all the improvements.
  “There’s never been a better time to borrow,” Paule said to the board.
  PCRMC can borrow at three percent on short-term rates and at five percent on long-term rates, Paule said.
  Paule suggested the board consider additional models, with a goal of “migrating” to one model during the next two-to-three months, because a decision to gravitate to a bond issue would take six months to realize.
  Paule also said the specific details of the Master Facility Plan would be formulated later this year, and it would entail some flexibility and “bail-out options.”
  In other business presented at the PCRMC Board of Trustees Meeting, the following items were discussed:
  • PCRMC Trustee John Park, Ph.D., apprised the board of comments made by members of the American Hospital Association’s Governance Institute Leadership Conference, which included concerns that new laws and case law interpretations have indicated that a hospital board has the ultimate responsibility for the failure of the medical staff to respond appropriately.  Hence, policy statements and bylaws need to be continuously revised to counter new liabilities.
      Another problem addressed in the conference included a concern about the increasing number of indigent, Medicaid and uninsured patients flooding the emergency rooms of hospitals.  The speakers suggested monitoring the payer mix of physicians and addressing the issue with those physicians who disproportionately direct non-paying patients to the hospital.
  Also, changes in payment procedures by Medicare and other insurance companies that delay payment while demanding proof of no medical errors whenever an undesirable outcome occurs could cost hospitals millions of dollars.  The speakers at the conference believe that hospital boards must insist on the use of “evidence-based best practice” as the best defense against these payment delays, while recognizing there still will be delays in payment because insurance companies benefit from the delay.
  Additionally, the conference expressed concern about violations of the “Stark Laws,” as it relates to any payments to physicians.  Under scrutiny are any payments for “director” status and payment for call without a clear, proportionate obligation.  Doctors who are paid for being on call should be hospital employees for the duration of the obligation.  The speakers felt that the hospital should do the billing if physicians are paid for call.
  Another concern raised in the conference regarded a hospital board’s actions that could involve a conflict of interest, particularly a “disabling” conflict of interest, which should disqualify certain individuals from membership on a hospital board if the conflict of interest includes investors, employees, owners, leaders or subordinates of a direct competitor or vendor.
  • A report from the Personnel Committee stated that employee turnover was down in most departments, with 1st quarter turnover rates decreasing to 3.7 percent.
      Also, worker compensation claims were “lower than they’ve ever been.”
  • A nursing update stated that PCRMC presently employed 335 registered nurses, 80 licensed practical nurses and 91 patient-care assistants.
  Also, the report stated the turnover rates were 15 percent for RNs and 20 percent for LPNs.
  While the vacancy rate for RNs in Central Missouri was at 11.4 percent, PCRMC experienced a vacancy rate of eight percent in 2007, the report noted.
  The challenge of adding nurses to the PCRMC staff was primarily caused by not having a RN training facility in the area, and to counter the effects, PCRMC initiatives included professional development incentives, reviewing patient satisfaction surveys and instituting the Nursing Peer Review, which began in March, 2007.
  One board member commented, “In the last year, I’ve seen a big improvement in the nursing staff, and I think it’s because nurses have been empowered by making decisions regarding the care of their patients.”