Randolph
The organization — which includes Gifford Medical Center and Gifford Retirement Community — reported a loss of $740,610 out of a total budget of $72 million for the fiscal year that ended Sept. 30, 2016, according to its audited financial statement filed with the Green Mountain Care Board.
“Gifford is very healthy,” Dan Bennett, who became the Randolph-based health-care organization’s chief executive officer in October, said last week. “This is something that health care organizations everywhere experience. The bigger story is that Gifford went as long as it did without having one of these dips in its performance.”
Hospital officials pointed to staffing issues, the costs of complying with health care reform requirements and rising pharmaceutical costs as contributors to last year’s deficit.
Gifford’s Chief Financial Officer Jeff Hebert said the departures of some primary care physicians, including two retirements, meant the hospital saw fewer patients than expected.
“We’re very close (to even),” Hebert said of the hospital’s revenues and expenses. “Our volumes, unfortunately, were just down because of shortages in providers.”
Overall, Gifford saw 72,392 patients in 2016, which was down from 81,935 in 2015, according to the hospital’s 2016 annual report. The shortfall in patient volume stemmed from the hospital’s outpatient clinics, said Ashley Lincoln, Gifford’s director of development and public relations.
Because there is a nationwide shortage of primary care physicians, Gifford often replaces these departing primary care doctors with physician assistants who are new to the profession, Lincoln said.
While many physicians spend their careers at Gifford and build a loyal following among their patients, it may take time to train new providers, who often are recent graduates, Lincoln said.
But, she said, “Hopefully, (they’ll) put their roots down and stay here with us.”
Besides the hospital in Randolph, which was first established in 1903, Gifford Health Care operates clinics in Berlin, Vt., Bethel, Chelsea, Rochester, Vt., Sharon and White River Junction and a nursing home and retirement community in Randolph Center.
The hospital incurred additional expenses when one of its two orthopedic surgeons left and the hospital filled in the gap with a traveling doctor, known as a locum tenens, Lincoln said. A similar vacancy in general surgery also was filled with a traveling doctor, she said. The hospital also had to hire traveling nurses for the nursing home, emergency department and inpatient unit last year, for similar reasons, Lincoln said.
“It can be a little bit tough to recruit to central Vermont,” she said. “We’re doing the best we can.”
Gifford currently has 45 open positions listed on its website.
Other cost increases included efforts to comply with health-care reform requirements, pharmaceutical supplies and insurance benefits (Gifford is self-insured), Lincoln said.
Complying with the federal requirement to move from paper to electronic medical records and participating in the voluntary Community Health Accountable Care, a Montpelier-based accountable care organization that aims to coordinate patient care in order to move away from a fee-for-service model, have taken time and money, Lincoln said.
Pharmaceutical cost increases in 2016 included new formulations of pneumonia and flu vaccines, Lincoln said.
These formulations were more expensive than their predecessors, she said.
In order to address the deficit and prevent losses in the future, hospital officials will look to curb spending in areas such as heating, recycling and supplies, Hebert said.
“We have to find every and all expenses and we capitalize on them,” Hebert said.
In addition, the hospital aims to increase its patient volumes, in part, by putting in place a new outpatient electronic medical record system. Lincoln said she anticipates the new system will be easier for providers to use.
In addition, the hospital aims to fill the vacancies in orthopedic and general surgery to eliminate the need for locum tenens, Lincoln said. Nursing staff levels have improved, so the hospital does not anticipate a need for traveling nurses this year.
“Gifford is small and nimble,” Lincoln wrote in an email.
Bennett, Hebert and Lincoln all said Gifford will not cut costs by reducing its labor force or by making major adjustments to its capital improvement plans.
“We’re appropriately staffed for the services that we provide,” Lincoln said.
Gifford provides primary care and preventive care, including health, oral, mental health and substance abuse services. The 25-bed critical access hospital includes a rehabilitation unit and a recently renovated birthing center. Gifford Retirement Community includes a new nursing home and adult day services.
Though no major changes are planned as a result of last year’s deficit, Bennett said he is looking at different ways to organize staff as people retire.
“A new CEO is going to do some things differently with the organization’s structure,” he said. Such changes are “not due to the operating loss last year.”
Bennett also indicated the hospital has shifted its capital improvement plans away from those outlined in a presentation to the Green Mountain Care Board last year.
The presentation, which is available on the board’s website, indicated the hospital planned to spend $9.3 million in capital improvements — including the construction of a new administrative building and renovations to former birthing and surgical units, in fiscal year 2018.
Bennett said that while the current administrative building is aging, he does not plan to replace it in 2018. His capital improvement priorities include some new equipment for the operating department and security upgrades such as changing the locks on the doors, he said. Forty-nine new independent living apartments at the Morgan Orchards Senior Living Community in Randolph Center are scheduled to open in August, according to the annual report.
While Gifford’s annual report and audited financial statement showed an overall deficit, Gifford Medical Center — which includes the institution’s main hospital and a “sprinkling of some clinics,” according to Hebert — ended the year in the black, with an operating surplus of $3.5 million, according to the audited financial statement.
“What that would tell me, if that’s the case, then the hospital funding must be subsidizing some other areas,” said Mike Davis, director of health system finances for the Green Mountain Care Board. “(It) could very well be the nursing home, but (it) could be broader than that.”
While the medical center made money last year, Gifford’s other two entities — Gifford Retirement Community and Gifford Health Care, a federally qualified health center which provides services such as primary care that tends to be reimbursed at a lower rate than some specialized care — saw losses, Bennett said.
Despite the lower reimbursement rates, these services are important to Gifford and to the community it serves, he said.
“We have a vibrant primary care/long-term care component to what we do,” he said.
Bennett said he takes a long view of Gifford’s finances.
“(I) don’t have any grave concerns about it,” he said.
For comparison, both Mt. Ascutney Hospital and Health Center in Windsor and Springfield Hospital showed slight operating gains in 2016, of $259,932 and $162,793, according to their respective audited financial statements filed with the Green Mountain Care Board.
In another measure of the hospitals’ financial well-being, all three came in under the 3 percent increase to net patient care revenue — combined revenues paid by Medicaid, Medicare and commercial insurers — set by the Green Mountain Care Board for fiscal year 2016.
Gifford saw an increase in net patient care revenue of 1.7 percent from fiscal year 2015 to 2016, while Mt. Ascutney saw an increase of 2 percent and Springfield saw a reduction of just over 4 percent in the same time period, according to hospital summaries available on the board’s website.
Eight of Vermont’s 14 hospitals came in over the 3 percent threshold.
One of the reasons those hospitals saw net patient care revenue increases last year above the threshold is because they are seeing more insured patients as a result of the Affordable Care Act, Davis said.
In that case, what used to be written off as unpaid or free care is now showing up as paid care, Davis said.
But the three Upper Valley hospitals “saw a different patient load or mix than the other hospitals,” he said.
Davis said the revenue trends will be discussed during the budgeting process for fiscal year 2018.
The Green Mountain Care Board, which was created in 2011 through the state’s Act 48, is responsible for controlling the rate of growth in health care costs. The board reviews and approves hospital budgets, major health care capital investments, health insurer rate increases and all-payer rates for providers.
Hospital budgets for the fiscal year beginning Oct. 1 are due to the board on July 1.
Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.
