Luis Hospital seeks board's OK for $1.2M revenue-boosting program
Published: April 3, 2014
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Territorial hospital board members on Wednesday balked at a $1.2 million contract for which Luis Hospital officials sought approval, raising an assortment of questions and concerns about the agreement - not the least of which was that they had not yet seen it.
Ultimately, though, the board lost a quorum while the discussion was going on, so officials plan to revisit the proposal during a telephone meeting Friday - after having reviewed the document.
The contract, with The Advisory Board, is for what Luis Hospital Interim Chief Financial Officer Nellon Bowry called "a revenue cycle optimization project," to help capture more revenue for the struggling hospital through better billing and collection practices and other means.
Bowry said that officials conservatively expect the contract to bring at least an additional $6 million during the year.
Territorial hospital board chairwoman Lynn Millin-Maduro was concerned about costs and how the overextended, cash-strapped hospital would pay for the contract.
According to discussion at the meeting, the contract would have the hospital pay The Advisory Board $250,000 spread out over the course of the first four months, then officials would reassess, set new benchmarks and enter into an arrangement for the remaining eight months of the year.
The maximum the hospital would be responsible for paying during the course of the year would be $1.2 million - with all but the initial $250,000 tied to The Advisory Board's performance and whether it accomplishes what it says it can do, officials said.
If the company meets the performance matrix, the contract would generate revenue that far exceeds what the hospital would owe The Advisory Board, officials said. After the first four months, if the company does not meet its benchmarks, it would owe the hospital money, they said.
But paying the initial $250,000 - which would be invoiced at about $62,500 per month for the first four months - could prove to be a challenge at Luis, where officials repeatedly have had to request advances on the hospital's allotment from the Central Government to make payroll. The hospital owes its vendors more than $40 million.
"How do you fund it without further setting back accounts and contractors that you currently have on payment plans and that you owe?" Millin-Maduro asked about the proposed contract.
"We expect that the low-hanging fruit is going to begin to generate almost immediately," Bowry said.
Millin-Maduro, who is also Property and Procurement commissioner, said that her recommendation would be for Luis officials to ask for approval for the first four months of the contract, then come back to the board with the request for the entire project once the company's performance can be assessed, after 30 or 60 days.
Officials also noted during the discussion that Schneider Regional Medical Center already has a contract in place with the same company that officials said is expected to generate at least $6 million for the St. Thomas hospital's coffers.
However, according to discussion, the maximum amount that Schneider Regional would owe The Advisory Board for the year is about $300,000.
Officials suggested the scope of work for the two contracts must be different and suggested that Schneider may have started out its revenue optimization project in a better position than Luis, with more of the basic analysis into its revenue cycle completed before The Advisory Board began work.
Board member and V.I. Finance Commissioner Angel Dawson Jr. requested copies of both contracts so that the territorial board can review them before taking action on the Luis request.
Because the Luis Hospital governing board does not have a quorum, all business that normally would go before it has to go before the territorial board instead.
Another issue Millin-Maduro raised about the contract for Luis is that it brings in an outside vendor to provide a service but does not provide training for Luis Hospital staff to take over the service when the contract is over. She noted that the hospital has brought in "consultant after consultant" to address billing problems.
"At some point in time, let's be realistic, you have to ramp up your human resources. Your staff have to be trained," she said, adding that without dealing with training and personnel issues, the cycle would continue.
"One year is going to turn into two years because at the end of one year, if you're not training staff, you're not bringing in the right personnel. What do you have at the end of one year? You have collections you've collected, but then when you revert back to what your staff is, where is the consistency to sustain and have some kind of retention on a positive billing and collection cycle?" she said.
Dr. Kendall Griffith, interim chief executive officer of Luis Hospital, said the hospital has tried having contractors provide training in the past and this time wants to do things differently.
Griffith said that the contract represents a new direction, outsourcing the work to give the hospital time to find the right mix of personnel for its billing department and providing "the opportunity to completely rebuild our revenue cycle team." He said staff who aren't working out in that area could be reassigned to other parts of the hospital.
Millin-Maduro said she still had concerns, but the board lost its quorum before the discussion was complete.
In other action, the board approved a variety of new policies for Luis Hospital; approved physician credentials; and heard reports from Griffith, Bowry, Schneider Regional Chief Executive Officer Bernard Wheatley and Schneider Regional Chief Financial Officer Fred Vitello.
- Contact Joy Blackburn at 714-9145 or email firstname.lastname@example.org.