Jobs cuts hit Vail hospital
VAIL, Colorado – The first wave of the federal health care overhaul washed away 22 jobs in the local hospital, hospital administrators said.
The Vail Valley Medical Center laid off 22 people Wednesday and Thursday.
The layoffs result from a double hit.
• The new federal healthcare reform package slashes the hospital’s Medicare and Medicaid reimbursements to 25 cents on the dollar, down from 50 cents on the dollar over the past five years. The hospital bills the federal government for medical care and supplies for Medicare and Medicaid patients, and the feds pay only one-fourth of that – down from a half.
• The hospital’s Medicare/Medicaid patient numbers have skyrocketed over the past three months. It’s up from 16 percent in March – low for most hospitals – to 20 percent in April, and 25 percent in May.
“We had anticipated an increase, but not as big as the increase we’re seeing,” said Doris Kirchner, Vail Valley Medical Center president and CEO.
“We were not anticipating an increase in volume and a decrease in reimbursement at the same time,” Kirchner said. “When those two numbers get out of whack, you have to become very efficient very fast,” Kirchner said.
Not only were Medicare/Medicaid payments slashed, but the feds now refuse to pay for an IV, such as the antibiotics IV you get when you have surgery.
For VVMC, that’s $490,000 a month.
“That’s a big hit to your budget,” Kirchner said.
The cuts in Medicare/Medicaid payments took effect late December 2010, Kirchner said. They’ve been phased in over the first half of this year.
“The federal government says they have to reduce their deficit. This is one of the things they decided they were no longer willing to pay,” Kirchner said.
And more changes are coming, Kirchner said.
“This is not the final cut,” she said.
The hospital has also seen a 27 percent drop in births this year, another declining revenue source, Kirchner said.
Those who lost their jobs were reluctant to talk. Part of their severance package was an agreement to avoid making public statements.
The VVMC staff was met by an early morning email Wednesday, saying 22 people would lose their jobs. Those people were called down to the hospital’s personnel office and laid off Wednesday and Thursday.
It didn’t sneak up on hospital administrators, said Andy Daly, VVMC board member.
“Doris has been working on this for a long time. They did see it coming,” Daly said. “As they became aware of the changes that were coming, they started putting the plan in place.”
“It’s a change Medicare dictated,” Daly said.
The changing economy made the job cuts necessary, Kirchner said.
Baby Boomers are aging and the sagging economy is forcing people out of employee insurance plans, and the hospital is seeing its percentage of Medicare, Medicaid and uninsured patients increase, she said.
In the face of all that, the healthcare reform package slashed reimbursements.
The hospital’s management is also taking a hit.
“We feel the senior staff should be part of the cuts in salary and dollars,” Kirchner said.
That means unpaid time off, a minimum of one week.
“Everyone was supportive of doing that,” Kirchner said.
Bonuses are also on the chopping block, Kirchner said.
“If we don’t make budget, no one’s getting bonuses,” Kirchner said.
They’ll keep taking Medicare patients, even though there is no federal requirement forcing them to do so, Kirchner said.
“We’re a community hospital. We have a duty and an obligation to serve our entire community,” Kirchner said.
The new Gypsum Urgent Care Clinic, opened last year, will stay open seven days a week. They’re curtailing their hours a little – eight hours a day on weekdays and 12 hours on Friday, Saturday and Sunday.
VVMC finished 2008 nearly $11.6 million in the red. Some of it was a self-inflicted wound, Kirchner said.
“We were simply not getting the bills out on time and were not billing insurance companies,” Kirchner said. “We were able to turn that around.”
The next year, 2009, they showed a 9 percent profit margin. In 2010 the hospital posted $35 million in profits, Kirchner said.
They’re moving ahead with the $17 million outpatient surgical center in Edwards, Kirchner said. It should be open by June 2012, and they’ll build it without having to go further into debt, Kirchner said.
Kirchner said the remaining $18 million is being spent like this:
• $14 million to capital equipment. Every year they have to replace and upgrade some equipment, Kirchner said.
• $2 million to pay the interest on debt.
• $2.5 million for new business opportunities.
“We always look at expanding our services. If we were going to expand our services, we would need some dollars to do that, so we always set some aside,” Kirchner said.
Of the hospital’s $203.5 million in total revenue in 2010, about 60 percent came from orthopedics. The Steadman Clinic and Steadman Philippon Research Institute has said it plans to double its numbers in the next 10 years.
“We have to continue to grow our business to stay viable. The surgery areas and the hospital are both full,” Kirchner said.
The federal health insurance overhaul is pushing hospitals toward more outpatient surgery. The Edwards surgery center provides the space for that, Kirchner said.
“Healthcare reimbursement changes are affecting every hospital in the country right now,” Kirchner said. “The reduction in government reimbursements is a reminder for us to streamline our organization and look for ways to be successful. Healthcare is evolving and so is VVMC.”
The Vail Valley Medical Center is not for sale, Kirchner said.
“Absolutely not. We are not talking to anyone about a buyout and we will not as long as I’m here,” Kirchner said. “We need to maintain who we are, a community hospital.”
Staff Writer Randy Wyrick can be reached at 970-748-2935 or email@example.com.
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