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Hermann Area District Hospital Board of Director’s January 2019 Meeting Recap

January 28, 2019

The Board of Directors met in regular session with a large group of employees and community present to hear discussion and offer input concerning the financial status of the hospital. After opening the meeting the Board heard from Dan Kalicak regarding assessing the community regarding what the community would like to see in a hospital given that a lot of rural communities across the country are not capable of supporting a full service hospital. Mercy offered the services of Mr. Kalicak at no charge last month after they shared with the Board that they didn’t see where the power of Mercy could make the hospital profitable. Mr. Kalicak has had over 30 years of experience in assisting communities in evaluating the healthcare needs. Mr. Kalicak shared that he envisioned with the Board permission to conduct one-on-one interviews with around 20 plus community leaders in Hermann, Owensville, and Montgomery City as well as holding community round table discussions to help supply the Board of Directors with how the communities evaluated their need for health care especially rendered by the Hermann Area District Hospital. Mr. Kalicak felt that the process could move along quickly and he would keep the Board appraised of the developments.

Following Mr. Kalicak’s presentation, Doug Clark, Hermann Area Ambulance District Administrator and Dennis Scheidegger, Ambulance District Board Member shared thoughts on how Emergency Medical Services (EMS) have changed over the years. While their district policy is to take patients where they want to be transported, regulations have come about which dictate where patients have to go for certain illnesses. Mr. Clark and Mr. Scheidegger commented that they want to work with the hospital board to improve communication. Both organizations committed to work on improved open communications. It was mentioned that the hospital needed to renew their efforts to have the same dialog with the Owensville and Montgomery City Ambulance Districts.

The Board heard reports that for the year ended December 31st that activity is down in most areas, from the emergency room, to clinic visits, to inpatient activity. A bright spot is the new emergency room physicians that started the 1st of November and that they are admitting more patients to the hospital. The financial status of the hospital and clinics is still not well, with looking at a loss for the year at over a million dollars even with efforts to curb expenses. Unfortunately, our revenues continue to decline at over $800,000 over the year. The hospital and clinics converted to Cerner in early August and are still working to resolve issues on both the medical and patient accounting side. These issues have slowed cash collections.

The City of Hermann received the appraisal on the Hermann Medical Arts facility but it was unfortunately done incorrectly. The appraisal was done on post flood conditions where it should have been done on pre-flood conditions. The appraisal was for $413,000 where it was anticipated to be higher.

In the Owensville and Montgomery City clinics we are losing nurse practitioners. We were fortunate to hire Jennifer Humphrey, APRN, FNP-C and she is completing her month supervisory work with Dr. Rothermich to allow her to see patients in the Montgomery City clinic. We have interviewed for a nurse practitioner to join Dr. Gulley in the Owensville clinic and should be able to extend an offer soon so we can work on receiving more referral revenue back to the hospital.

The Board received the annual report prepared by hospital staff which gave a recap of events, finances, policy changes, and contract changes along with completion of departmental goals along with updated goals for 2019. While the annual report is a good tool, it is mandated by Medicare for the hospital to maintain its Critical Access Hospital status which allows the hospital and clinics to receive cost reimbursement.

The Board reviewed the results of the ongoing Operational Assessment. As part of the assessment we have lost over twenty employees by not replacing staff and in January the hospital completed a round of lay-offs of six employees. With the lay-offs the hospital is down to 145 full-time equivalent employees versus 172 at the beginning of 2018. Many of the employees that were present were concerned about the long-term viability of the hospital. After much discussion, the Board and Administration assured them that over the last few years they have been trying a variety of measures to increase revenue and decrease expenses. While everyone hated to see lay-offs occur, it is anticipated that the efforts to increase activity will be fruitful.

Following the December meeting all four of the incumbent board members filed for their positions. By the closing date for filing, no one filed against any Board members so an April election will not have to be funded.

The Board reviewed two issues being addressed this year in Jefferson City. Governor Parsons unveiled his rural health plan with the intent of giving greater access to care in the rural areas of the state. There was no mention in the plan for expansion in the Medicaid enrollment. The Board also discussed the new regulations that are due out from the state in how they will address medical marijuana. There are variances in how the passed amendment will interface with current federal rules.

Eric Eoloff, President of Mercy Washington explained that because of their affiliation with the Hermann Area District Hospital that either he or Dr. Chalk regularly attend HADH board meetings to help grow the relationship. Mercy has several physicians that have specialty clinics here to keep from patients having to drive to Washington to receive services. The agreement with Mercy also calls for them to provide assistance with pharmacy oversight especially in the evenings so medications can be dispensed to inpatients. Mercy’s inpatient volume has been up. They are seeing a lot of patients with RSV, or respiratory virus. They are also seeing a higher volume of ER patients that are being admitted.

Their cardiac volume and neurology patient census is also up. As with the Hermann Area District Hospital, they are facing recruiting challenges. They are continuing to have to use agency nurses. He also shared that Mercy has been recruiting for a Neurologist for three years as well as for an orthopedic for two years.

Karin Wolking, Home Health Director, shared that the service continues to have staffing issues. The ever changing Medicare regulations continue to present challenges. Medicare has a new reimbursement model in 2020, requiring the department to start becoming familiar with that now. Experts are predicting a 20 – 30% failure rate for those agencies that don’t get it right.

The Board approved three contracts. For the year ending December 31st, the Board will be using WIPFLI to perform the financial audit and preparation of the Medicare and Medicaid Cost Reports. As part of the Operational Assessment, the Board approved a confidentiality agreement with RHG Consolidated for them to prepare a proposal for the Board to see if they might be interested in operating the hospital. Lastly, the Board approved an agreement with United Healthcare for increased rates for home health services.

The Board held a roll call vote to go into executive session to discuss personnel issues. The Board took no action in the executive session and voted to come back into open session. In open session the Board further discussed using student interns to assist with public relations issues or other avenues that might be of assistance. At the end of the brief discussion the Board voted to adjourn for the evening.