Ailing hospital may be forced to close, commissioner says

If University Medical Center can’t get its financial act in order within three years, it is possible that the county hospital will close and the poor will get vouchers from the county to receive medical care at other area hospitals, Clark County Commissioner Steve Sisolak said Monday.

That worst-case scenario, Sisolak said, was projected by consultants when he asked recently what could happen if UMC is not able to make "significant changes" and bring about the "cost reductions" they say are necessary to keep the county hospital solvent.

"I don’t want to close the hospital," said Sisolak, who was interviewed for a consultants’ report that will be presented Wednesday to the commissioners who act as the UMC Board of Trustees. "But the county can’t keep bailing it out. If we used vouchers, we would negotiate the best prices for treatments with hospital systems in the area."

Under law, the county must take care of health care for the indigent. Largely because of caring for the indigent and uninsured, UMC lost $72 million in 2010.

FTI Healthcare, the Tennessee-based consulting firm hired last year by the county to make recommendations on how best to run the hospital, forecasts that if current trends continue — as the state runs a deficit of its own — annual hospital operating deficits of $10 million more per year will be realized, leading to an operating deficit of more than $100 million by fiscal year 2014.

"Without significant changes in governance structure, immediate process improvements and cost reductions, UMC will be forced to significantly reduce clinical scope or close within three years," a draft of the executive summary of the report states. "Limited funding of $65 million is available from Clark County to support the operating deficit and capital requirements of UMC."

Kathy Silver, the hospital’s CEO, said Monday she did not want to comment on the draft of the report because not all commissioners had read it. FTI Healthcare did not return calls Monday.

The executive summary states that through improvements in revenue, combined with reduced costs, the hospital can enjoy "a sustainable improvement of $44 million by fiscal year 2014." The summary does not detail what would give rise to the improved revenue.

One specific way to cut costs, the report states, is through "support from labor."

Nick Di Archangel, director of communications for Service Employees International Union Nevada, which represents the majority of UMC employees, was not willing to talk about wage concessions Monday.

"We’re willing to talk at the table to help save an important community resource," he said, noting that union consultants recently helped the hospital realize millions in new federal Medicaid revenue, work acknowledged by Sisolak.

"There are creative ways in coming up with more money," said Di Archangel, who did not specify what those ways might be.

Commissioner Chris Giunchigliani noted that the report, which calls for changing the governance of a hospital to a 501(c)(3) nonprofit organization that has a board independent from the commission, does not spell out how such a change will help raise revenue.

The report, which argues UMC must get significant philanthropic support to survive, states: "Community financial support is not possible without significantly distancing the county from governance and management of the existing organization or any new structure."

"I just wonder if people are going to hurry and open their checkbooks when it’s changed to a 501(c)(3) because the hospital doesn’t have as much influence from the commission," Giunchigliani said. "I’m willing to listen, but I just don’t know. … I don’t really support any kind of privatization of the hospital. I want to make sure we’re not just helping a few doctors or others instead of the people we’re supposed to serve."

She said she doubts the voucher system would work because the county could not afford to pay private hospitals what they are used to getting for insured patients. "They do not have to take anyone" other than in the emergency room, she said.

Dr. John C. Ruckdeschel, who sits on an 11-member advisory board for UMC that was appointed by the commission, does see merit in the governance change.

"It will keeps politics out of the running of the hospital," he said, adding that politicians may do what is best for a constituency rather than the hospital.

Giunchigliani said, however, "that every board becomes political in one way or the other."

The commissioner also said that she doubts that the hospital will close in three years if the findings of the consultants aren’t followed.

"That doesn’t mean we shouldn’t put cost-saving measures in place," she said. "We already have come with ways to save $8 million a year through budget cuts and other cost savings."

Sisolak said consultants believe that the hospital can increase revenue by attracting more fully insured patients.

"They don’t say how," he said.

Ruckdeschel said "that is all about marketing" the hospital’s "Centers of Excellence," areas, such as cardiac care, that are specialities for which the hospital has a strong reputation.

"That kind of thing takes time," Sisolak said, reiterating that the report states there is only a three-year window for the county to get the hospital’s financial picture straight. It is unfortunate that people see UMC as place only for poor people.

Eight pages of the 23-page executive summary are devoted to improving UMC’s relations with the University of Nevada School of Medicine. That could "achieve a higher level of clinical expertise in areas in which the hospital must excel," the report states.

But the consultants also conclude: "Creating an academic health center is likely part of the long-term solution, but will not solve the existing financial problems in the near future and is likely to add to the cost."

Former Clark County Commission Chairman Rory Reid, who last year said changes had to be made in governance of the hospital or it may have to shut down, said he wasn’t surprised by the consultants’ findings.

"Over a year ago we realized that structural changes had to be made for it to financially viable," he said.

Jim Rogers, a former chancellor of the Nevada System of Higher Education, also was not surprised by the consultants’ report.

Rogers had volunteered to spearhead the effort to improve the fortunes of the financially beleaguered hospital. His idea of an advisory board to help run the hospital was accepted by the commission.

"I think the commission has meddled too much in the business of the hospital," he said, but added that he wasn’t sure that a 501(c)(3) board was necessary. "I would hate to blow up this (advisory) board. They are doing good work and getting things in order."

To Sisolak, "the sobering report" makes it clear that the commission should have acted earlier. Each day, he said, it seems the news for the hospital gets worse.

In his recent State of the State address, Gov. Brian Sandoval recommended a 5 percent cut in Medicaid reimbursement to inpatient hospitals. Medicaid is the free health care program for the poor, disabled, handicapped and some elderly in which 270,000 Nevadans are enrolled. The number is increasing by 3,000 to 4,000 each month with the vast majority in Clark County.

Medicaid reimbursements have fallen by 25 percent since 2006 and don’t come close to covering a hospital’s cost of care.

What is happening at UMC reminds Sisolak of people who aren’t too smart about taking care of their own health needs.

"It’s like only going to the dentist when you have a toothache," Sisolak said. "You should have gone for regular checkups and then you would have never had a toothache and needed emergency treatment. That’s exactly what’s happened with UMC. Instead of fixing problems along the way when they weren’t too severe, now we have to go through some kind of painful emergency treatment."

Contact reporter Paul Harasim at pharasim@reviewjournal.com or 702-387-2908.