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Pagosa Mountain Hospital in Critical Condition, Part One |
Bill Hudson | 5/9/08
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I left last Tuesday’s regular meeting of the Upper San Juan Health Services District Board of Diectors meeting feeling somewhat shaken.
 After watching the Archuleta County Commissioners claw their way out of near-bankruptcy last year — and just lately, seeing the Town of Pagosa Springs digging deep into its own reserves to fund a necessary new wastewater treatment facility, and also covering the confusing financial questions surrounding the Pagosa Area Water and Sanitation District’s recent actions on the Dry Gulch reservoir — I was not prepared on Tuesday to hear about yet another Pagosa Springs governmental unit struggling with financial issues.
But Tuesday’s meeting gave very clear indications of serious financial problems at the new Pagosa Mountain Hospital, which opened its doors in January this year. I hope, with this series of articles, to shed some light upon how those issues came about and what the board is planning to do about them.
I had not attended a USJHSD board meeting for several months — in fact, not since the new hospital had opened. I had written briefly about the hiring of CEO Dan Boatman last year, after two other CEO candidates had first accepted and then declined that position.
Although the USJHSD meeting agenda had not indicated anything obviously newsworthy pending at Tuesday’s regular meeting, we had just run a short article about Boatman’s seemingly-sudden resignation, and I hoped to get a bit of background on that resignation, and on the board’s ideas about replacing Boatman.
The mood at Tuesday’s well-attended meeting was surprisingly somber, I thought, when I took my seat in the second row of what looked like mostly hospital employees in the audience. The board members present were Michelle Visel, Pam Hopkins, Chair Neal Townsend, Bob Scott, Dr, Jim Pruitt, and Bob Goodman. As the board discussed the minutes of recent meetings, I discovered that the board — which normally meets once a month — has been meeting almost weekly for several weeks.
Other than the somber tone, the first indication of serious financial trouble came during a report by Chief Financial Officer Ken Johansen.
Addressing the board, Johansen spoke with a relaxed manner that belied the problem to which he was referring: “You have the April 30 statements in front of you. We have about $260,000 in cash. I think you’ve all been involved with the cash flow projections that we’ve been talking about for the past month. We’re sure we’re good for the month of May; we think we’re good for the month of June. July is where we hit the wall — where we’re going to have to…”
Johansen didn’t finish the sentence, and changed direction slightly.
“My deliverable, in my mind, is: I’ve got about a month, or a month and a half, to make the cash start coming in, because July is when we’ve got to have the money. So that’s my target.”
As the meeting unfolded, it appeared that the July cash flow problem was only a symptom of several financial ills facing the new hospital. In the midst of it all was Boatman’s departure, and the need to hire a new CEO, or perhaps contract with a management company — or even lease the hospital out to a private company.
As I mentioned earlier, I was listening to unsettling issues with which I was not terribly familiar, coming in on the story after several month’s absence. But the basic issues were certainly nothing new in the often-contentious overall history of the Upper San Juan Health Services District.
The Upper San Juan Health Services District was originally organized in the 1980s as the Upper San Juan Hospital District, with the goal of founding a hospital in Pagosa Springs. When that never happened — for various reasons, including lack of voter support — the District instead renamed itself the “Health Services District” and took over operation of area ambulance services from Archuleta County. Later, the District began operating the Dr. Mary Fisher Medical Clinic at the corner of San Juan Street and Hot Springs Boulevard, across the street from the Visitors’ Center near the downtown bridge — partially with the expressed aim of serving Pagosa residents who could otherwise not afford health care.
The revenue shortfall of clinic operations were supposedly covered by an area-wide tax levy.
The clinic struggled for many years to be financially viable, and the District finally convinced area voters to help finance a new, expanded and better equipped clinic, on donated land on South Pagosa Boulevard near Highway 160. When serious management problems became apparent with both the EMS ambulance service and the new Dr. Mary Fisher Medical Center, the District hired an assertive new District Manager to shake things up and get the two medical operations to operate in the black, for the first time.
The new manager, Dee Jackson, proved to be too assertive for some people’s taste, and at one point, almost the entire staff of the Mary Fisher clinic resigned en masse. The board continued to support Jackson and brought in outside physicians to run the clinic, but the former clinic staff had important friends in the community, and a dramatic district election replaced nearly the entire District board of directors.
Although some sources claimed the Mary Fisher Clinic was now operating in the black, the new District board — faced with, they said, continued financial losses at Mary Fisher and with missing and inaccurate financial records — shut down the clinic for “a couple of months” to do some long range planning.
The clinic never re-opened. The new board decided, instead, to pursue another tack. Encouraged by two retired physicians, the board began to look into the possibility of expanding the clinic into a Critical Access Hospital, a special designation for rural hospitals that allows them to receive much higher disbursements from Medicare than Mary Fisher had been receiving — up to 100% of actual costs.
If the district could continue to receive the higher tax levy voters had approved for financing the Mary Fisher Medical Center, and roll that over into a new hospital…?
At first, the hospital conversion was estimated at $2.5 million. As the plan developed, the hospital cost grew to $12 million.
When the board put the numbers together, with the help of several consulting firms, it still looked workable, even with the higher building cost — assuming a few key conditions could be met. First, the new hospital would have to serve mainly Medicare patients, because private insurance companies are notorious for paying less than the actual cost of medical services.
Second, the hospital would have to be approved as a Critical Access Hospital within a short time after opening its doors.
Third, the whole operation would have to be run as efficiently as possible, with “clean,” accurately-coded bills going out to Medicare and insurance companies in a much more timely manner than had ever happened at the old Mary Fisher clinic. That would require experienced, state-of-the-art hospital management and bookkeeping.
Fourth, most of the patients who currently went to the hospital in Durango would have to change their destination and use Pagosa Mountain Hospital instead.
The voters agreed with the plan, and gave the board permission to underwrite the financing of the new hospital with the existing mill levy.
At Tuesday’s meeting, it appears that, four months after opening its doors, the Pagosa Mountain Hospital has failed to meet every one of those conditions.
Part Two on Monday |
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