JFL Hospital Struggling to Make Payroll

Gov. Juan F. Luis Hospital continues to bleed a river of red ink, and needs a cash infusion stat before its condition can stabilize, but changes in how doctors are reimbursed and increased Medicaid funding may turn it around, officials told a Senate panel Thursday.

"Over the years previous CEOs have all delivered the same message: Juan Luis needs more funding," said Chief Executive Officer Kendall Griffith.

Sen. Nereida "Nellie" Rivera-O’Reilly wanted to know: "How much cash does the hospital have on hand?"

Luis Hospital Chief Financial Officer Deepak Bansal said, "We have about one day of cash. That represents about $250,000 on an average basis, but really we have about zero right now and we are being very careful about releasing checks."

"I foresee difficulty meeting our next payroll," Bansal added.

Asked what he planned to do, Bansal said he was asking the Office of Management and Budget to advance the hospital a portion of its budget allotment.

Griffith and Bansal recounted some of the factors squeezing the hospital, some of which are long-established systemic imbalances that have been raised by hospital officials at Senate hearings for years. They faulted the tens of millions of dollars annually in care that is never paid for and reimbursement rates for Medicaid that are lower than stateside rates.

Griffith outlined a series of money-saving and efficiency-increasing efforts the hospital has made in recent months and he and Bansal both agreed the hospital could be stabilized and get on an upward path if the immediate crisis is dealt with.

"If we can make it through the next couple of months, we will turn the corner because the pieces are coming together," Griffith said.

The hospital has more than $40 million in outstanding debt and several urgent capital investment needs for information technology infrastructure and other matters, Griffith said.

Asked how much cash it would take to get the hospital out of its immediate crisis, deal with immediate compliance issues with the Centers for Medicare and Medicaid Services and become stable, Griffith estimated $6 million as a minimum figure, while Bansal suggested $10 million, giving a slightly different list of immediate priorities.

Sens. Clarence Payne and Sammuel Sanes both said the Legislature would try to assist, and that they would meet with hospital and administration officials to form a plan. But Sanes pointed out that money may be difficult to provide now, while the government is itself facing a budget crisis.

"We can put $100 million in the budget easily, but it is up to certain entities to release the money and that is the bottom line," Sanes said.

Even with a cash infusion, "without a change in the way we bill for physicians it will be very difficult to ever make ends meet." Bansal said. He said doctors who are on salary at the hospital also directly bill patients for their services, while the hospital charges a facilities fee.

He said the salaries are lower than the national average but, while salaries are low, total compensation is very high, even as the hospital goes broke.

"To put it in context, Schneider (Regional Medical Center) and JFL are the only two hospitals in the United States with this model," Bansal said.

He wants to change to a model where doctors’ salaries are increased but all billing goes to the hospital.

If the hospital got $2 million for IT infrastructure and was able to implement the pay changes, "how quickly would you see a turnaround?" O’Reilly asked.

"Within a few months," Bansal said.

"Would it be enough for the hospital to break even?" O’Reilly asked.

"Yes," Bansal replied.

Griffith disagreed. He said, “I think it will take longer and I don’t think changing the physician model will make us break even. I think it will bring in additional revenues – there is no doubt about that – but there is no way right now, without crunching the numbers, to say we would break even."

A Medicaid schedule that is the same as the one stateside would mean considerably more payment to the hospitals, dramatically changing the financial situation, he said.

The hospital is also working to meet eight areas of improvement imposed by the Centers for Medicare and Medicaid Services as conditions for Medicare and Medicaid participation, Griffith said.

Griffith, Bansal and Luis Hospital Governing Board Chairman Anthony Ricketts all emphasized the hospital had made improvements and taken numerous actions to address CMS concerns and were hopeful that the next inspection would go well.

"Although we are not perfect, we have made significant strides towards meeting the conditions of participation in light of our funding and our circumstances," Griffith said. “Of the eight conditions that apply, three conditions have been fully met and we are working diligently on the remaining five and some are close to compliance.”

No votes were taken at the information gathering hearing of the Health, Hospitals and Human Services Committee.

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