[R]ANDOLPH – From 2000 to 2016, the chart plotting Gifford Medical Center’s operating margins showed a relatively steady upward trend.
But a sudden, precipitous drop in fiscal year 2017 has attracted the attention of state regulators and spurred action from hospital administrators.
Gifford executives say they’re addressing the core causes of last year’s $874,293 operating loss by filling key primary care and surgical vacancies. They’re also implementing dozens of cost-cutting measures that have totaled about $1 million so far.
While the hospital is not expected to meet its state-approved revenue targets again this fiscal year, administrators say they believe its prognosis is good.
“We’ve had a time of great change, and sometimes that can be a little rocky,” said Dan Bennett, the hospital’s president and chief executive officer. “But we’re moving in the right direction.”
Gifford is a 25-bed critical access hospital, a federal designation based in part on a facility’s rural service area and its distance from other hospitals.
Gifford has, in the words of one administrator, a relatively “long reach”: A recent fact sheet from parent company Gifford Health Care shows at least 1,000 visits from towns like Barre and Montpelier in the north; Sharon and White River Junction to the south; Tunbridge and Chelsea in the east; and Rochester to the west.
Administrators are trying to serve a far-flung population without overreaching in terms of services, Bennett recently told the Green Mountain Care Board.
“We are a small critical access community hospital,” Bennett said. “We are not trying to provide highly specialized surgical and other speciality services. We’re trying to provide the core services that ought to be provided in a community hospital of our size.”
Bennett was called before the care board mainly to discuss finances, not services.
In reviewing Vermont hospitals’ fiscal 2017 financial performance, care board members found that eight of the state’s 14 hospitals came in below their state-approved budgets for net patient revenues – a figure that represents patient care revenue before expenses are factored in.
Gifford did not have the worst performance of those eight hospitals, but it did miss its $57.76 million revenue target by more than $3.4 million, or roughly 6 percent.
Financial statements submitted to the care board show the hospital posted an operating loss of $874,293 in fiscal 2017. The addition of more than $1 million in non-operating revenue pushed the hospital’s margin into the black, by just $158,015.
By comparison, the hospital’s operating revenues exceeded expenses by $2.2 million in fiscal 2016. Non-operating revenues pushed Gifford’s margin to $4.6 million that year.
In his appearance before the care board and again in a subsequent interview, Bennett pointed to its workforce as the major factor in the hospital’s recent poor performance.
Gifford lost three surgeons in fiscal 2017 – a major blow for a small hospital, Bennett said.
“For us, when we lose that number, we’ve lost a significant number of the people who provide those services for our community,” Bennett said. “We can’t just shift that over to somebody else.”
The temporary staff the hospital hired to fill the gaps are only a temporary solution.
“There is a higher cost to utilizing temporary staffing like that … and they don’t necessarily do the same amount of volume,” Bennett said. “It’s not a good situation for the long term.”
Gifford also saw the departure of several primary care doctors, resulting in the loss of nearly two full-time-equivalent positions. While primary care is not included the medical center’s budget, “it impacts everything we do at the hospital,” Bennett said.
“If those people are not coming to Gifford Health Care for their primary care, then they may be going someplace else, and that has a downstream impact on what happens at the hospital,” he said.
Bennett said he does not believe there was any single factor that led to physician departures, and he pointed out that hospitals across Vermont are having trouble finding and retaining primary care doctors.
But he also noted recent shifts in hospital leadership including his own arrival at the beginning of last fiscal year.
“There was a lot of change that went on in that time frame,” Bennett said. “We had a CEO who was here for 17 years, and he left and went to another opportunity. And we had a number of other changes as well. Sometimes, change begets change.”
It also can lead to poor budget performance. Gifford’s statistics for fiscal 2017 show a decrease in inpatient and outpatient visits, as well as a 14 percent drop in surgical procedures compared with fiscal 2016.
In response, Gifford is adding staff: Bennett said the hospital has filled two of the three surgical vacancies and is rebuilding its primary care roster. In primary care, “by August or September of this year, we’ll be back to where we had been,” he said.
Bennett echoed other Vermont hospital executives saying medical recruitment takes time in a rural setting. And he doesn’t believe Gifford’s new hires will allow the medical center to meet its $59.5 million net patient revenue budget for fiscal year 2018, which ends Sept. 30.
“I think we have the right building blocks in place, and I’m optimistic about the future,” Bennett said. “But it’s unrealistic to think we’ll hit that number this year.”
In addition to building capacity, Gifford has been reducing expenditures. The hospital’s recent presentation to the care board included three pages of cuts detailing savings ranging from $25 up to $177,500.
Bennett credited hospital staff with “making a robust effort to contain costs everywhere that they can.”
“We’ve done everything from looking at office supplies on up to looking at our contracts with vendors and making sure that we have the right contracts in place – overturning every rock to look at where we can find cost savings,” he said.
Executives also say they expect to capitalize on the hospital’s strengths in order to get back on track and stay there. That includes Gifford’s primary care offerings, which Bennett has characterized as “uniquely positioned to succeed” in the state’s planned shift toward a health care model based on prevention.
The hospital also touts its birthing center, which recently marked its 40th anniversary and draws expectant mothers from a wide area.
Bennett also noted a greater emphasis on community outreach like screenings and substance-abuse prevention. Another example is Gifford’s new partnership with South Royalton-based HealthHUB to bring a mobile dental-hygiene clinic to Randolph.
Ashley Lincoln, a hospital spokesperson who also directs Gifford’s development work, said she believes the medical center has strong community support regardless of last year’s budget numbers.
“We recently completed a capital campaign, and in this small community, we raised $5 million,” Lincoln said. “Certainly I think that is a number that’s remarkable.”
