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GVH to buy medical center at base area to bolster revenue

Deal part of plan to increase needed revenue

Executives at the Gunnison Valley Hospital are considering an expansion into the mountain healthcare market, with the acquisition of the Crested Butte Medical Center in Mt. Crested Butte. They say it would be one way to help them get through recent economic hard times that have left the hospital ailing from outstanding debt.

 

 

 

According to GVH chief executive
Randy Phelps, “We’re actively
engaged in conversations with Doctor
Sherman and members of his team
at Crested Butte Medical Center. We
would very much like to see it completed
by the first of the year, but both
parties have to do their due diligence
and we need to come to final terms.”
At a work session on Tuesday,
November 18, Phelps told the Board
of County Commissioners the clinic
was part of the hospital’s “strategic
initiative” to improve its economic
standing.
The Crested Butte Medical Center,
founded in 1973, is located in the
Axtel Building at the base of the ski
slopes, providing emergency and
sports medicine.
“The emphasis is that we’ve got
to grow revenue—we’ve got to grow
business because there is only so much
juice you can get from the orange. We
would see [the medical center] as an
extension of our emergency department,
taking care of injuries that come
off the mountain,” he said.
Phelps and GVH chief financial
officer Tim Cashman were also able to
tell the commissioners that gains were
being made in the wake of a June deficit
of more than $700,000.
At the same time, the hospital
was dealing with a half-million dollar
gap between the amount of money
that was coming in and the amount
going toward operational expenses.
July offered a reprieve, when
the hospital saw an influx of patients
and was able to bring in $3 million in
revenue and turn a half-million dollar
profit.
“When we met with you in June
we were looking at a $500,000 operating
loss. If you go back and look,
we’ve made up $400,000 in the last
four months. So our goal for the budget
is to produce enough cash flow to
maintain that,” said Phelps.
That means maintaining the operational
cuts that came with the turnaround
and withholding a raise for
hospital employees that customarily
comes after the New Year.
“We’re not going to give raises
in January. We’ve targeted May 1 as a
possibility, if there is enough cash flow
to support it,” said Phelps.
Despite cutting some costs, however,
the hospital will continue to recruit
new physicians, seek accreditation
through the Joint Commission
and provide education and “performance
improvement activities” for
GVH staff.
Expenditures will also be made
on some capital improvement projects,
to the tune of $140,000.
“Those things are must-do projects
and are on the short list and many
of our expenses are either growthrelated,
in terms of supporting physician
practices or investment directly in
patient care,” Phelps said.
By continuing to spend in the
areas most likely to augment the hospital’s
revenue stream and improve
services, Phelps said, a priority is maintaining
the quality of care through the
economic hard times.
In the new economy, patients at
GVH can expect more dialogue with
hospital staff before non-emergency
services are provided, with payment
serving as a main talking point.
Cashman told the commissioners
that new patients at the hospital
could expect to speak with someone
about their financial responsibilities,
whether they enter through an office
or the emergency room, and might expect
to be asked for a down payment
after hearing an estimate of what the
charges will be.
“Our research indicates that hospitals
that are doing this have had
a very dramatic change, not only in
their receivables and cash but also in
the communication they have with
the customer. Anybody would want
to know what you’re buying before
you buy it, instead of waiting six
months,” he said, referring to the typical
amount of time it takes for insurance
companies to inform customers
of their costs.
By being more forthcoming with
the financial aspect of the care, Cashman
hopes that patients will start a
payment plan with the hospital immediately,
reducing the number of people
paying entire bills or large co-pays outof-
pocket, $20 a month, interest-free.
“We’re seeing more of the higher
deductibles where people are going
with these [healthcare plans] and
they have to pay the first $5,000 outof-
pocket and they’re paying $20 a
month to the hospital bill. And anyone
who owns a business can tell you that
if you’re not earning interest on your
outstanding debts, you’re not making
money,” said Cashman.
One result of the high number of
people making slow, or no, payments
is the rapidly growing number of “accounts
receivable,” which now total
about $6 million.
“We’re writing off about $1.2
to $1.3 million in bad debts this year
alone. That represents about 7 percent
of the hospital’s gross revenue. That’s
not counting what is given to charity,
that’s not counting patients that
are undocumented or self-pay,” said
Cashman.
Cashman said he hoped to have
the hospital’s complete budget available
for review by the second week in December.

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