Indiana Economic Digest | Indiana
Advanced Search

• Most Recent

home : most recent : census/demographics October 23, 2018

10/4/2018 5:47:00 PM
Fayette Regional hospital caught in cost squeeze, CEO says
The Fayette Regional Health System hospital’s entrance from Virginia Avenue.
+ click to enlarge
The Fayette Regional Health System hospital’s entrance from Virginia Avenue.

Darrell Smith, Connersville News-Examiner

Fayette Regional Health System is caught in the midst of a cost squeeze and officials there say they are doing all they can to continue.

In the past week, the Connersville News-Examiner received information that the hospital is eliminating jobs and departments and that four members of its leadership team have recently submitted resignations. The News-Examiner confirmed three of the resignations.

CEO Randy White and board chairman, Jim Thomas, sat down with the News-Examiner Wednesday to discuss issues that are facing the community hospital.

“You’re talking about a perfect storm, a poorer, sicker community that has a very high Medicaid and Medicare reimbursement, losing revenue on what is at best a break-even proposition, you have decreasing cash flow,” White said.

In response, the hospital has reduced overall expenses by 20 percent in the past four years, he said.

The health care industry is complex and changing, especially for rural hospitals, White said. As a result, all options are being reviewed. 

Since 2010, more than 80 rural hospitals have closed due to cash flow and regulations and there 673 hospitals that are vulnerable to closure, he said. Fayette Regional is having to make tough decisions.

He said all hospitals have looked at options like realignment to survive. In the past several years, 43 percent of the hospital’s 517 employees have been reorganized. 

“I would say our board, their expectation is that we will make the hard decisions and do what is best for Fayette Regional as compassionately as possible,” he said.

“We have a very involved board of directors and we are universally committed to this place continuing and surviving and providing excellent health care,” Thomas added. “That’s our goal and with the senior staff. We will do everything necessary to keep this place alive because it is critical to the community. We will fight and make what changes are necessary.”

The hospital turned its ambulance and patient transfer business over to Fayette County Emergency Medical Services and has closed its home health services.

Continuing the Obstetrics and Gynecology Department is under review, White said.

Members of the executive team who have left, in most cases, went to higher paying positions with more opportunities. Dealing with the tight financial situation at Fayette Regional has been of benefit to them in their new positions.

The hospital is losing administrators now and will in the future. So far, replacements have been found that do an excellent job, he said.

Thomas said he worked in human resources at Roots, Stant and in Rushville before he retired.

“It’s hard to recruit and retain top level management in Connersville in any occupation in any industry,” he explained. “With recruiters, if you get one, the word goes out in the recruiting market and then the phone starts ringing because it’s a competitive market and we’ve got good people.”

He has interviewed those who are leaving. In most cases, the employee did not initiate the action but received a call from a recruiter.

The hospital recently changed the company providing physicians in the emergency room.

“We are tightly regulated, and in our contract we have the obligation that when we are spending our dollars, we know where those dollars are going and what they are used for,” White said. “We are at a point of expiration as to what they estimate the cost being, to us wanting full financial understanding of why those costs got to that point.”

Not being able to address that, he said the former service stepped away from the hospital. Documentation must be presented before payment and both sides did not come to agreement after several months of discussions.

The hospital is No. 1 in the state for treatment of substance abuse patients, they said.

Of the hospital’s patients, 88 percent are on Medicare or Medicaid, which are reimbursed at or below cost of delivery. Another 4 percent have no insurance but the law requires the hospital to treat them, he said.

“Fayette County has a lot of great people but when you look at the county health rankings, which has little to do with health care, but has to do with smoking, number of births, single parent homes, high school graduation rate, income, we’re 92 out of 92 counties,” he said. “Our premature deaths, number of children in poverty, children in single parent homes is incredibly high.”

That measures opportunities and access to health care, he said.

Health care policy is tough to track with a portion administered by the state and another portion by the federal government. Changes made in the past few years have removed millions of dollars from corporations like Fayette Regional, he said.

The state of Indiana ranks 49th among the states for lowest public health funding, he said. 

White currently serves as president of the Indiana Rural Health Association that includes 33 hospitals.

Related Stories:
• Leaders say bankrupt Fayette County hospital needed, but don't know how they can help

Copyright 2018 The News-Examiner

Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

Software © 1998-2018 1up! Software, All Rights Reserved