Hospital Responds to Community Concerns Over OB Closure

By Lura Jackson

 

Amid a flurry of concerns generated by the community related to the impending closure of Calais Regional Hospital’s Obstetrics [OB] unit, CEO Rod Boula, Chief Nursing Officer Ericka Marshall, and Vice President of Community Relations Dee Dee Travis agreed to answer a series of questions to explain the hospital’s position and put the community more at ease. 

A Close Look at the 

Hospital’s Finances

Over the past several years, the hospital has been running at a significant loss due to multiple factors, many of which are uncontrollable. Understanding these costs and how they are generated are key to understanding the hospital’s financial position, which may be described as precarious at best. Between 2010 and 2016, the average loss per year is $1,827,763. One of the largest costs for the hospital is paying for temporary staffing due to being unable to secure permanent staff. That cost is approximately $2,010,387 a year.

Broken up by service lines, the OB department is the most loss-heavy. This is due in part to the way that the federal government calculates its cost-based system for Medicare. Medicare covers 101 percent of Medicare compilation costs – although there are caveats. The only costs covered are those determined to be “reasonable” and “allowable”, and, following the federal government’s sequestration in 2013, that figure automatically drops to 99 percent from the start. Costs that are “reasonable” and “allowable” are based on federal government standards to ensure that a hospital is maximizing its efficiency in its community. Since most OB patients are not Medicare patients, and the demographics of the community are notably higher in age than the national average, OB services are not covered by the federal government for Calais Regional Hospital. As a result, while most hospitals in the nation are around 72 percent coverage, according to Boula, Calais Regional Hospital is running at 38 percent reimbursement. “That’s why you have to do away with certain service lines, or you lose your hospital all together,” Boula said.

Last year, the OB department generated a loss of $500,000, approximately $400,000 of which was related to the on-call surgery team. Having an on-call surgery team is expensive due to the multiple layers of staffing required. The OB department has been running at a steady loss for decades, and its closure has been discussed for twenty years. 

Part of the problem is declining births in the area. Last year, 60 babies were born at Calais Regional Hospital. While Travis notes that that figure represents approximately 63 percent of the total births in this area – meaning people are going elsewhere to have their babies – Boula said that “we would still be in a red situation if we had 115 births with respect to the OB.” Boula previously stated that 180 births a year would be necessary to keep the OB unit solvent.

While the hospital has managed to keep the OB unit going for years by juggling its finances, it has become increasingly unable to do so. Another major factor in the hospital’s financial situation was a change to how “free care” patients are handled under the previously mentioned Medicare reimbursement program. Boula explained that four years ago the federal government coverage of low income patients went from 101 percent to 55 percent. Costs of free care patients went from $929,494 in 2012 to $1,858,519 in 2016. 

The changes in free care aren’t the only challenges to happen in recent years. The hospital has been struggling with an increasing amount of bad debt generated by patients. “Bad debt is significant,” Boula said. “Growing up in a small community like this, I know what it’s like. I know who the people are. You get people that are cash poor and asset rich, and they don’t pay their bills.” Travis explained that one of the complications is that many patients who would qualify for free care do not complete the paperwork or return the hospital’s calls, leaving the hospital no choice but to label their costs as bad debt, which has no reimbursement opportunities. Bad debt has increased at the hospital from $1,295,672 in 2012 to $2,143,378 in 2016.

In summary, between the changes to free care reimbursement and the increase in bad debt, the hospital has been tasked with absorbing almost $2 million in additional costs over the past four years. “The cliché is stop the bleeding,” said Boula. “Right now, we’re hemorrhaging.” Boula said that the hospital is currently “payroll to payroll” and that it has been operating on almost-depleted reserves.

Fixing the Problem

It doesn’t take a mathematician to figure out that closing the OB unit, with its annual losses of $500,000, won’t be enough to stem the hemorrhaging that Boula is describing. The hospital is aggressively reviewing all of its existing service lines to determine how to maximize their efficiency and considering opening new service lines that will fall under the “reasonable” and “allowable” cost coverage that Medicare offers.

One solution that the hospital is implementing in January is the shifting of home health services to a separate entity still under the corporate umbrella of the hospital. The shift, which Boula says will be unrecognizable to patients, will save the hospital $230,000 a year. “It’s doing those things that will help make our facility more financially viable,” said Boula. 

Among the services that the hospital is aiming to expand and introduce that will be covered under Medicare are oncology, pulmonology, and cardiology. “We do have a large contingent of folks in our community with cancer,” said Boula. “We have a lot of COPD patients and respiratory distress patients. We do have cardiology now, but we can augment to offer new services.” Incorporating telemedicine is one of the primary ways that the hospital anticipates off-setting the costs and difficulties of recruiting specialists.

The cost of utilizing management firm Quorum – which is $400,000, outside of salaries for the CEO and CFO – has been repeatedly mentioned by the community. Speaking in defense of Quorum, Boula said that to his understanding the relationship has been a good one for both parties involved. “There is value in having the Quorum folks as part of the management,” Boula said. He explained that Quorum provides consulting and reduced costs for services, which would have to be obtained elsewhere at full market value without membership with Quorum. Travis said that one such cost that is offset by membership in Quorum is mandatory patient surveying. Travis also noted that being a part of Quorum provides education to board members through webinars, on-site, and regional meetings. She added that she is able to have access to her peers across the country through Quorum if questions or situations unique to her position arise.

In the past, the hospital has operated a 100-bed nursing facility and the question has been raised as to whether it could do so again. While Boula said that nursing homes are a “feeder” for the hospital, he said that the hospital could not operate one directly as the costs would not be covered under Medicare. 

Another potential option for revenue for the hospital comes from the recently proposed expanded new facility for the Veteran’s Administration Clinic. Boula said that the hospital will benefit from providing whatever services are necessary that the clinic cannot meet to its patients, but expressed that at present the VA is 90 days delinquent on half a million dollars. He could not answer as to the cause of the delay beyond that it was federal money. 

Ultimately, Boula said that for the hospital to continue its operations in the community, the community will need to actively utilize the services that it offers. Every time potential business in the form of lab work, CT scans, MRIs, or any other services are given outside of the hospital, it hurts the potential of the hospital to stay in business. 

Ensuring the Safety of Women and Expectant Mothers

While the costs and possible solutions for the hospital are one side of the equation, ensuring that mothers and their children are safe during the pregnancy process is another. Several associated concerns have been voiced by the community, including instances of emergency C-sections, drug addicted babies, and neonatal care.

“Rural hospitals that eliminate their OB services typically do not have the capability to do emergency C-sections,” said Chief Nursing Officer Marshall. Calais Regional Hospital will be no exception. However, “We’ve looked at several different possibilities for these patients and we’re working with people who are experts in this area.”

The emergency room staff will be receiving 25 hours of training over five sessions related to the care of the mother and the care of the child, culminating in two additional certifications. These certifications will enable the emergency room staff to identify when a mother is in need of an emergency Cesarean, to provide neonatal resuscitation, to monitor premature babies, including recognizing if it is decompensating, and to administer drugs that delay labor contractions when necessary. “There’s not that many that come in that have to be delivered immediately,” said Marshall. “When they do, we’ll be prepared to deliver them in the ER and then transfer them to a center afterwards.” In situations where a breaching mother is transferred to another facility, Marshall said that a trained nurse will always be present during the transfer.

At present, if a woman is in need of an emergency C-section during off-hours, the on-call staff can take as much as 45 minutes to assemble. Marshall said that it was an equivalent amount of time to assemble the Lifeflight team and take the mother to Bangor. The hospital only had one occurrence last year and it fell within national guidelines of performing that Cesarean within half an hour. All-in-all, emergency C-sections represent a very small percentage of patients. 

In terms of babies that are facing withdrawal from drugs, Marshall explained that babies who have been exposed to drugs while in the womb do not suffer from withdrawal symptoms until 24 hours after birth. She said that the most commonly suffered withdrawal symptoms are related to cigarettes. In situations of narcotics and other substances, Marshall said that those patients are more likely to experience complications in the labor process along with having a lack of prenatal care. “We struggle with that currently.”

“We’re working on making prenatal care available here, making it as stronger or stronger than it has been in the past in the hopes that people will use it,” said Boula. “But you can’t force people to use it.”

Marshall said that the hospital is actively looking to collaborate with other organizations to provide prenatal care, women’s care, and gynecological services. Travis elaborated that some providers would be receiving additional primary care and some specialists would be brought into the hospital periodically to meet the needs of the community. 

“We do still have very competent nursing staff and emergency department physicians that will be able to safely manage any complication as we do now, it just might be a little differently,” said Marshall.