FAIRFIELD – Administrators for Fairfield Memorial Hospital say they can see the light at the end of the tunnel, but added at Monday night’s joint work session with Fairfield County Council that they’re not through the tunnel just yet. And while revenue and operating expenses have remained fairly constant compared with last year, the hospital has some additional expenses on the horizon – expenses for which they are seeking assistance from County Council.
Near the close of Monday night’s presentation, hospital CEO Mike Williams unveiled a list of “unfunded cash requirements” facing the health care facility in coming months. At the top of that list was a $500,000 line of credit, necessary to keep the hospital solvent while they transition to a new electronic medical records system, known as “Cerner.” Williams later explained that the new system will make Fairfield Memorial compatible with other larger hospitals in the exchange of medical records, including Palmetto Health Richland, with which Fairfield Memorial has a growing relationship.
“Any time you go from one computer system to another, when you’re talking about an organization with revenues of $27 million and you’re actually collecting around $9 or $10 million of that, $11 million of that, there’s a transition period where you’re going to need cash to carry you over,” Williams said. “There’s going to be a down time. That is a concern and we need to prepare for that.”
The total cost for implementing Cerner is $1.8 million, Williams said, half of which is covered by incentive programs. The hospital began installing the system last December and is expected to launch the new program in September. During the transition, Williams said, the hospital will require the half-million dollar line of credit to cover expenses while the new records and billing program comes online.
In addition to the Cerner costs, Williams said the hospital is asking the County for $75,000 in start-up money for the Blue Granite Medical Center. Williams said the money will be used to hire a full-time physician, which the center must have on staff in order to qualify for state and federal grant funds. The hospital is also seeking another $75,000 to renovate their emergency room, as well as an unspecified amount to repair the facility’s aging roof.
Pressed by Council for an estimate on the cost of the roof repair, Williams approximated that the cost could be between $200,000 and $250,000. The worst part of the roof, he added, is over the operating room, and reopening the operating room is one of the hospital’s plans for increasing future revenue. Williams said earlier in the meeting that the hospital hoped to bring general surgery, orthopedic surgery, OB/GYN procedures and colonoscopies back to Fairfield Memorial in the near future.
Tim Mitchell, the hospital’s Chief Financial Officer, noted that the $500,000 Cerner credit line would be paid back to the County after the transition to the new records and billing system had been completed. The line of credit would have to be in place by September, before Cerner goes live. The hospital currently has a cash balance of about $50,000, Mitchell said, down from $350,000 in February 2012.
Collections compared to last year, Mitchell said, are down from 44 cents to 39 cents on every dollar owed. Mitchell attributed that trend to the growing number of self-pay patients and the shrinking number of Medicare and Medicaid patients. Bad debts, he said, accounted for 16 cents of every dollar written off by the hospital last year. That number has increased to 25 cents.
The hospital is also in a precarious position regarding access to emergency capital.
“If any piece of major equipment went down,” Williams said, “it would be hard to replace it.”
But, Williams said, he does expect the hospital’s cash flow to improve over the next nine to 12 months with expected changes to Medicaid.
“We’ve just got to get there,” Williams said.
Council Chairman David Ferguson said the requests would be brought to the full Council at an upcoming meeting. Just a little over one year ago, the County poured $1.2 million into the hospital.
