Even as Northwestern Medical Center administrators develop a cost-cutting plan, they’re pursuing a multimillion-dollar emergency department expansion that will include new rooms for mental health patients.
Leaders at the St. Albans hospital say the two efforts are not contradictory: Northwestern must take short-term action to “align our expenses with our revenues,” a spokesperson said, but the emergency room project is “desperately needed and deeply rooted in patient safety.”
The emergency upgrade is especially timely, given that the hospital has encountered regulatory issues in trying to care for increasing numbers of mental health patients.
“Having an outdated emergency department which was not designed for the volumes it treats and does not truly have the privacy or security that is best practice in today’s standard of care is something we need to address,” said Jonathan Billings, Northwestern’s community relations vice president.
Northwestern’s financial bottom line has been positive in recent years, especially in comparison with other Vermont hospitals that are struggling with annual losses.
But a closer look at Green Mountain Care Board statistics shows that, while the hospital posted more than $10 million in net operating income in fiscal year 2015, that number fell to $3.66 million the following year. In fiscal 2017, the hospital had an operating loss of $1.26 million.
The care board has not yet compiled hospital financials for fiscal 2018. But in a narrative developed while preparing their budget for the current fiscal year, Northwestern administrators said the hospital “continues to have a very flat operating margin.”
Earlier this year, Northwestern Chief Executive Officer Jill Berry Bowen wrote that “these are not easy times” for nonprofit community hospitals due to revenue constraints, governmental regulations, decreasing reimbursements and other factors.
Northwestern’s financial reserves “are not unlimited, and our recent operational losses and the stock market decline have impacted them,” Bowen wrote. “Therefore, to be sustainable, we must ensure that our expenses align with our revenues while still not losing traction on our path to the future. Short-term, that means tightening our belts even further and continuing to seek out every efficiency.”
How that belt-tightening will impact the hospital remains unclear. Billings said administrators are finalizing an “operational improvement plan” for submittal to the hospital board, and they expect to share that plan with staff and the community next month.
Billings said the plan “does not include widespread furloughing or layoffs.”
“The emphasis of our plan is on strategies that avoid the need for reductions in personnel, such as renegotiating contracts where possible, absorbing vacant positions where appropriate and creating greater efficiency with supplies,” Billings said.
In the meantime, the hospital wants to move forward with an emergency department project that “has been in the hospital’s long-range plans for a number of years,” Billings said.
Northwestern has filed documents with the care board seeking a certificate of need for a renovation/expansion of the emergency department that’s expected to cost between $5.5 million and $6.5 million. The project could start later this year, pending care board approval.
The emergency department’s “non-private, undersized, outdated design” dates to 1990 and can’t handle current demand, hospital administrators wrote. Plans call for renovating about 9,600 square feet of the existing department, while adding 841 square feet of new space.
The redesigned emergency room will feature private treatment rooms rather than the current “curtained treatment bays.” The hospital also wants to add two more treatment areas, two “airborne infectious isolation rooms” and a “modern design that maximizes staff and patient safety.”
Part of that plan is the addition of several “safe holding rooms” for “patients who are suicidal or dealing with severe mental health issues.”
That’s a key issue for Vermont hospitals, which have seen an influx of mental health patients who often must wait in emergency rooms for extended periods due to a lack of available inpatient psychiatric beds. Northwestern is among several hospitals that have been cited for deficiencies in treatment of mental health patients.
In care board documents, Northwestern administrators acknowledge that “we do not have the proper physical environment to adequately care for patients with these needs.”
During last year’s regulatory inspections related to mental health deficiencies, the Northwestern emergency department’s “design and physical environment were of a significant concern to the surveyors,” Bowen wrote.
“We, like other Vermont (hospitals), continue to see an increasing number of patients with higher acuity mental health needs coming to our (emergency department) for care,” she wrote. “Improving our treatment areas to better meet the serious needs of patients with these conditions will be a dramatic improvement in quality.”
State documents say the emergency room project will be paid for with a still-undetermined mix of cash on hand and borrowing. Despite Northwestern’s acknowledged financial pressures, a care board assessment of Vermont hospital finances in the first three months of fiscal 2019 found that Northwestern had the most days cash on hand of the 13 reporting hospitals.
Billings said the hospital “carefully considers how much capital expenditure we can take on at any time, balancing our financial means with the need to keep pace with caring for our community.”
“We have to stay financially sustainable so we can continue to invest in having proper care environments,” he said.
