Cautious optimism

Southwest Washington health care organizations are a bright spot in the local economy –patient volume is up, most are hiring, not firing, and many have expanded or have expansion plans.

But administrators are keeping a wary eye on the future.

“We’re paying attention, like everyone else,” said Tom VanSweringen, executive director of The Vancouver Clinic.

 

Patient volumes steady

Gary Walker, public affairs director for Providence Health and Service’s Oregon Region (which includes Southwest Washington), said the health care industry tends to lag six to 12 months behind the broader economy because laid-off workers’ medical insurance is extended through the Consolidated Omnibus Budget Reconciliation Act (COBRA) for up to a year.

Plus, workers concerned about getting laid off often opt for elective procedures sooner, to use insurance benefits while they last, he said.

Providence is in the midst of a building remodel in Vancouver for a new primary care clinic.

Jonathan Avery, chief administrative officer at Legacy Salmon Creek Hospital, said Legacy Clinic Fisher’s Landing is “seeing a steady stream of new patients,” while the hospital experienced a 13 percent growth rate in the number of adjusted discharges in the first seven months of its fiscal year compared to the same period a year ago.

On the specialty side, Zane Smith, a physical therapist and owner of Vancouver-based Timberline Physical Therapy, said the clinic has seen a steady increase in patient volume since opening in August 2007, meeting or exceeding patient volume goals.

But the patient mix is changing.

Smith said 75 percent to 80 percent of his patients are now using workers’ compensation benefits, which he called a “dramatic difference compared to even six months ago.” Private insurance patients have dropped off quite a bit, he added.

Southwest Washington Medical Center is also seeing a shift.

Ken Cole, SWMC’s manager of public affairs and communications, said the hospital has seen an increase in the number of outpatients but a decrease in admissions to the hospital.

And Walker said Providence has seen an uptick in charity care at its regional hospitals. Charity care refers to care provided by a hospital that patients can’t pay for.

“This is not a surprise to us and we are projecting to see more of that in 2009,” Walker said.

In losing money on these patients, hospitals can be left in the position of charging more to insurance companies and private-pay patients to cover the gap.

Cascade Dental Group is trying to make care more easily accessible to patients.

Ann Taylor, chief operations officer at Vancouver-based Cascade Dental Group, said the group offers cash payment discounts and free exams and X-rays.

Cascade Dental also extended evening and Saturday hours so patients don’t have to take time off from work to go to the dentist, and offers a 50 percent discount on cosmetic procedures, such as teeth whitening.

In fact, Taylor said, a recession may not be all bad news: “These situations cause us to think more creatively about staffing, cross-training and customer service,” she said.

 

Budget woes

With an eye toward an uncertain future, most administrators are taking a close look at their budgets. At the top of the worry list for hospitals is potential reductions in state Medicaid funding, due to Washington’s projected $6 billion budget shortfall.

Avery said 21 percent of LSCH’s business is paid for by state Medicaid funds while another 35 percent is funded through the federal Medicare program.

If these funds are cut, the remaining 44 percent will have to pick up the slack, probably through increased commercial insurance payments, which translates to higher insurance premiums for consumers.

“We have to ensure our revenue base is strong enough to provide care for everyone,” said Avery.

Other sources of revenue include private insurance, patient co-pays and private-pay patients.

Cole is also concerned about Medicaid cuts. Already this fiscal year, SWMC’s margin is at a mere 0.5 percent, compared to a goal of 5 percent. The decrease is mostly due to higher-than-anticipated equipment and staff costs.

Cole said the hospital has undergone “significant belt tightening,” and had already identified ways to cut costs by $20 million by renegotiating contracts with suppliers and sending staff home if there is a low number of patients in the hospital.

Cole was especially positive about SWMC’s recent reduction of “ambulance divert” (when SWMC’s emergency room is full and cannot accommodate additional patients) – from four to five hours per day to minutes per day. The hospital recently formed a Patient Access to Care Team, which focuses on ensuring that patients who arrive at the hospital can be admitted and treated, not sent elsewhere.

One of PACT’s recommendations was to use a new patient and staff tracking software application. By knowing in real time how many patients are where and what staff is available, SWMC can now process 10 more ER patients per day.

These additional patients are expected to  generate an additional $2.4 million per year for SWMC.

Bad debt is also a concern for health care providers.

Avery said LSCH’s bad debt was 6 percent more than the budgeted amount – up $3 million compared to last year.

The hospital has partially offset this increase in liability by slashing its capital budget in half – reducing it to $3 million.

“This will have a ripple effect throughout the economy,” Avery said. “That’s equipment we’re not buying, projects we’re not building.”

But LSCH’s revenue is up 23 percent this year to $85.2 million due to an increase in surgical volume and other high-revenue service lines, he said.

Providence, too, is cutting capital spending.

While the Vancouver clinic remodel is nearing completion, the medical group put a new medical office building in Newburg, Ore., on hold for a year.

Smith said that at one time, he considered moving his physical therapy clinic to a new location in about a year. But now he thinks he will simply expand on-site in about 18 months.

 

Employment growth

Despite the recent news of a major funding gap at Portland-based Oregon Health and Science University that could result in major layoffs, medical facilities in Clark County do not foresee similar staffing issues.

Cole said SWMC isn’t planning layoffs, but is looking closely at jobs vacated by attrition. If the job isn’t critical, he said, a replacement simply won’t be hired.

Brandon Byars, manager of recruitment services and workforce planning at Kaiser Permanente, said Kaiser continues to grow but is more cautious about hiring.

“It’s just a matter of do we need 10 new employees or five?” Byars said.

Recession worries aside, many health care professionals remain optimistic about the future of the health care industry.

“It will continue to grow, grow, grow,” Byars said.

HEALTH CARE FACILITIES EXPANDING IN CLARK COUNTY

ModernHealthcare.com reported in late November that “hospital systems across the country are pulling back on construction projects, keeping blue-prints on the drawing board, halting bulldozers and leaving completed facilities unopened.”

And although capital budgets are under fire, Clark County is home to several health care expansion projects.

The Vancouver Clinic completed its new facilities in October on Northeast 87th Avenue in Vancouver– “on time and on budget,” said Executive Director Tom VanSweringen.

Southwest Washington Medical Center’s $43.7 million build-out of the hospital’s fourth through sixth floors, which will house a total of 80 beds, is on track for completion in September 2009, said Ken Cole, manager of public affairs and communications.

A similar, 64-bed build-out at Legacy Salmon Creek Hospital got underway at the end of October and is also scheduled to be complete in September.

Legacy Salmon Creek is also developing a 5,000-square-foot Children’s Outpatient Center at the hospital, which will offer pediatric rehab services and space for pediatric specialists, which Avery said means families won’t have to spend so much “time on the bridge” traveling to see specialists in Portland.

The center is in the permitting stage now and should be complete early next summer.

Clinics, too, are expanding and growing.

Gary Walker, public affairs director for Providence Health and Services’ Oregon Region said Providence’s new primary care clinic on Stonemill Drive in Vancouver will open in February – a few months later than originally planned due to construction delays.

The $2 million remodel project includes a new roof and HVAC system, as well as fleshing out of the interior of the building.

Legacy will also open another new clinic – this time in Battle Ground. Scheduled to open on Jan. 5, the clinic will be housed in a temporary space at 1706 W. Main Street. In the late spring, the clinic will move to permanent quarters in Gardner Center, at the corner of Northeast 199th Street and state Route 503.

Initially, the clinic will employ one family practice physician and one nurse practitioner. 

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