Hospital Warns of Funding Needs

This is the first in a series of stories on the financial crisis at the Juan F. Luis Medical Center and the various plans being proposed to confront it.

Leaders of the Juan F. Luis Medical Center on St. Croix are warning that the hospital could continue to contract its services and staff if it does not receive additional appropriations from the central government and a large cash infusion to settle its $35 million debt.

“If we were not the only game in town, we would be bankrupt,” said Dr. Kendall Griffith, chief operating officer at JFL. “There’s no way that any organization, any business can handle a $35 million debt with continued decreasing revenue streams.”

During an interview with the Source, Griffith joined JFL Chief Financial Officer Deepak Bansal and chairwoman of its board of directors, Kye Walker, in painting a grim picture of the hospital’s financial situation.

Bansal said that despite the recent round of layoffs and significant cost saving measures, the hospital was still struggling to maintain a positive monthly cash flow. The hospital enjoyed several consecutive months with a positive cash flow last year, but has consistently lost money so far in 2013.

Bansal said that, at any given time, the hospital only has enough cash on hand to run the institution for a single day.

“When you hear people say they live paycheck to paycheck, at least that’s seven to 14 days,” he said. “Can you imagine the stress level of making everything balance in an organization this size, which is not that small, with one day of cash on hand?”

In that effort to balance, not everyone is getting paid. Bansal estimates the hospital’s total debt at just over $35 million dollars. As of April, the Water and Power Authority alone was owed $6,238,435 and Bansal freely admitted that the hospital was not paying its electricity bill.

This may be one the hospital’s lesser problems, however. To date, WAPA has not threatened to turn off the lights. What’s of greater concern is the money owed the various medical supply companies that stock the hospital.

Griffith confirmed that the hospital has suffered a rash of supply shortages. Shipments of everything from surgical supplies to sanitary wipes have been held up by suppliers concerned about payment, and the hospital has had to scramble to sooth tempers.

“Every time we get into a situation we were able to talk to the vendor and they understand our need and they understand this is a matter that can impact a patient’s life,” he said, but Bansal quickly added that the shortages so far had not undermined the hospital’s quality of care.

He said none of their vendors had cut them off completely, but many required partial payment up front for supplies and some have charged higher rates to compensate for the risk of supplying the hospital.

Bansal warned, however, that the vendors’ patience was not infinite.

“Most of the vendors don’t want to carry us anymore,” he said. “If we go over by a dollar, they cut us off. They’re putting us on credit hold.”

The hospital’s financial woes stem from a number of sources, but the primary culprit is uncompensated care. The V.I. Code mandates that the hospital treat every patient, regardless of ability to pay. The law also states that the government will be liable for that cost.

Walker said the government has not lived up to its side of the bargain.

She said that instead of calculating the hospital’s yearly appropriation based on the amount of uncompensated care it provides, the legislature continued to base their funding off of the number of staff the hospital employs, a practice held over from the days when the government covered part of the hospital’s payroll.

Bansal said that in Fiscal Year 2013, JFL received just $18.9 million in appropriations but spent upwards of $30 million on uncompensated care.

“Allocation of resources is killing us right now,” Griffith said, adding that he was frustrated that the Senate had not found money elsewhere in the budget to shift towards the hospital, citing a number of agencies that received more funding than JFL.

“For health care to be so low down on the priority list is troubling, because death is permanent,” he said.

Bansal cautioned that even if the hospital was fully funded for its uncompensated care, it would not necessarily fix its financial situation. He said they would likely still need some type of large cash infusion as well if they were to retire their debt.

Several senators have expressed sympathy for the hospital’s situation, but questioned how much they would be able to do given the fact that the government’s revenues continue to decline.

Sen. Samuel Sanes said he would “do whatever is possible to keep the hospital going,” but expressed extreme doubt that a bailout would be possible this year.

He advocated instead for merging JFL with the Roy Lester Schneider Hospital on St. Thomas to reduce overhead costs and increase bargaining power.

Sanes has submitted a bill to this effect, which will be explored more thoroughly later in this series.

Sen. Nereida "Nellie" Rivera-O’Reilly said the hospital should continue to reform its business practices and look beyond the government for solutions.

“Attracting private investors alongside a solid long-term plan would be the most effective way to get cash they need because the bailout of $35 million is not possible if the financial state of the government is as fractured as the administration claims,” she wrote in an email.

As the Senate approaches its summer budget hearings the question of what to do with JFL’s appropriation promises to be a hot topic. The Senate Committee on Health, Hospitals, Human Services and Veterans’ Affairs will hold a hearing Wednesday afternoon to begin discussing the topic.

Griffith warned that if the Senate cannot help and the hospital’s finances do not improve, they may have to make “tough decisions,” including possibly cutting more staff or services.

Griffith continued to say that he still believed the hospital provided an exceptional level of care and that his staff would persevere.

“All we can do is provide the best level of care that we can given the funding,” Walker added.

In the next installment, the Source will take a closer look at cost-saving and revenue-generating measures taken by the hospital in an effort to balance its books.

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