Hospital leaders okay new services intended to stanch flow of red ink

Hospital leaders okay new services intended to stanch flow of red ink

Michele Ellson
Alameda Hospital

The board governing Alameda Hospital on Monday signed off on a pair of service agreements intended to boost the hospital’s finances as its available cash fell from nearly two weeks’ worth to little more than enough to cover the hospital’s bills for two days.

The Alameda Health Care District Board approved a contract with Select Therapies to manage rehabilitation services at the hospital’s nursing home and subacute units and okayed revisions to another hospital managers hope to sign with two orthopedic surgeons to provide services here. The board also signed off on a bonus pay agreement for its top two managers for this year, though the bonuses would be contingent on the hospital achieving a positive bottom line and on a successful transition of the Waters Edge nursing facility to the hospital.

Select Therapies was recently hired to manage physical therapy, occupational therapy and speech therapy services at Waters Edge, which Alameda Hospital is in the process of taking over. Alameda Hospital’s chief financial officer, Kerry Easthope, said the hospital would benefit from having the same provider for all of its long-term care services. The company, which specializes in long-term services, is in nearly 1,000 locations nationwide.

“This consistency is especially important now that (long-term care) services have become such a significant part of our overall patient population,” Easthope wrote in a report to the board, adding that the state will survey all three facilities as one unit and that standardized clinical and administrative policies and procedures are required. He said the company also offers expertise in Medicare and Medi-Cal billing.

Hospital managers had considered bringing the company in to manage all of its rehabilitation services, but they opted to keep rehabilitation services for its acute care unit in-house. Easthope said the one-year contract, which is set to go into effect on July 1 and to auto-renew annually after that, could net the hospital an additional $460,227 a year. The addition of an orthopedics program could increase that amount to $632,000 a year, Easthope said. And he said the contract will mean better rehabilitation services for patients.

The orthopedics contract could net the hospital an additional $6.6 million over three years – provided that both physicians sign on, said Tony Corica, the hospital’s director of physician relations. Corica said the hospital has signed a tentative agreement with the spine surgeon, and managers are expecting an answer from the sports surgeon within a week. The program is expected to begin in September.

Hospital managers have worked to put new programs in place in order to reverse near-annual deficits, a problem accelerated by Kaiser Permanente’s decision to allow its contract to perform surgeries at the hospital to lapse in 2010. In addition to the rehabilitation and orthopedic surgery contracts, a new wound care center is now under construction at Marina Village that hospital leaders are hoping to have operational by July. They are also finalizing a takeover of Waters Edge, a 120-bed nursing home the hospital will manage and lease.

Chief Executive Officer Deborah E. Stebbins has also made some changes in the head office, moving Easthope into the chief financial officer’s chair and hiring a business development officer. Easthope had been the hospital’s assistant administrator for the previous seven years, and he held the chief financial officer job at a variety of health care organizations prior to that, he said.

March was a tough month for the hospital financially, unaudited financial statements show. The hospital lost $401,000, pushing its year-to-date bottom line $1.1 million into the red, and its cash on hand fell from $1.8 million to $428,000 – enough money to cover a little more than two days’ worth of the hospital’s bills. Some $820,000 went into a government program which is expected to earn the hospital money and another $642,000 toward payroll.

The hospital board voted to approve a bonus pay agreement for Stebbins and Easthope for this year, but much of the pay would be predicated on the hospital earning $540,000 – a mark Hospital Board member Elliott Gorelick said he didn’t think the hospital would reach.

Gorelick questioned whether the hospital would be able to maintain asset and fiscal health requirements associated with its wound care center construction loan. Stebbins said hospital managers have been in discussions with bank managers about the hospital’s financials, and that they are hopeful new programs will be online soon.

Easthope said April’s numbers should be better since the hospital will receive $2.6 million in parcel tax revenue and that it should see another $500,000 in federal program funds in June.

In other hospital news, the board voted to move its meetings from Mondays to Wednesdays. It was unclear when the change would take effect.
And Board Vice President Robert Deutsch announced that the state’s Fair Political Practices Commission closed a conflict-of-interest investigation against him without taking action. The commission had received a complaint alleging Deutsch improperly voted for the hospital to approve the continued collection of a hospital parcel tax when his medical practice has a contract to serve as the hospital’s medical director, he said.