Boynton Beach’s Bethesda Health hospital system has laid off 35 people, CEO Roger Kirk said today, after the system lost money for the first time in decades.
The layoffs, the non-profit’s first since 1999, include both support and clinical staff. And, Kirk said, they’re meant to defray losses of about $15 million in the 2012-2013 fiscal year, as well as position the system’s two hospitals for what may be more lean times ahead.
“It’s kind of been a perfect storm,” Kirk said. “We are experiencing exactly what we see as a national trend – the move to outpatient services, declining inpatient services, declining elective surgeries as a result of the economy, and high-deductible health plans. We’ve also seen a spike in uncompensated care.”
The hospitals had already trimmed $7 million from their combined $250 million budget over the summer through departmental consolidations and other efficiencies, he said. Bethesda East and West used to have two post-anesthesia recovery rooms, one for outpatients and the other for endoscopy procedures, for example. Now each hospital has one merged recovery room. Also, at Bethesda East, during the summer, at least, one floor has been closed. During the hours when its pediatric emergency room sees few patients, the pediatric team moves over to the regular ER.
“We are going through and really trying to right size the organization to what we think will be the new normal,” Kirk said in an interview with The Palm Beach Post today.
The hospital industry is in the midst of dramatic change, for many reasons. The Affordable Care Act includes new incentives and penalties for Medicare providers which reward quality over quantity. Private insurers are making the same demands. Meanwhile, the digitization of paper records has required major investments in technology and training.
And there’s a local pressure: JFK Medical Center in Atlantis launched an aggressive market-grabbing tactic of opening satellite ERs near competing hospitals, exploiting a state law meant to help rural areas without existing hospitals. Bethesda is feeling that, too, Kirk said.
Meanwhile, even people with private insurance are staying away from the hospital whenever possible, as high co-pays and deductibles bite into family budgets.
But some of Bethesda’s wounds have been self-inflicted. Its debt service is significant. It had borrowed $130 million to both refinance old debt and build Bethesda West Hospital on Boynton Beach Boulevard. That new hospital, which opened last December, has cannibalized about 30 percent of the East hospital’s patients from key zip codes along Military Trail, more than projected, Kirk said.
Things aren’t going to improve next year. The Florida Legislature has made major changes to how Medicaid pays its bills. Those changes will cost Bethesda Health $2 million next year in reimbursements for its neonatal intensive care unit.
Plus, the state’s decision not to expand Medicaid means hospitals that serve a disproportionate share of the poor are getting disproportionately hurt. Those hospitals have long depended on extra federal reimbursements for their role as safety-net institutions. That special funding disappears next year, when mandatory health insurance takes effect under the Affordable Care Act. Bethesda’s patient mix includes 7 percent uninsured and 20 percent Medicaid, the safety net insurance program for the poor.
But the most important factor may be unfilled beds.
Bethesda’s 401-bed hospital in eastern Boynton Beach has had an average census of 296 in the first three months of 2013 — that’s a 74 percent occupancy rate during the busiest season of the year.
Bethesda’s new 80-bed hospital out west has had an average census of 39 patients a day during the same period, an occupancy rate of just 49 percent. The eight-month-old facility is actually exceeding expectations right now, Kirk said.
“Our patient days are about 25 percent above projections. The area where its running below budget is elective surgical volume. As doctors start to settle in that will grow,” Kirk said.
But Bethesda West isn’t the only hospital in Palm Beach County whose occupancy is under 50 percent. West Palm Beach’s Good Samaritan Medical Center and West Palm Hospital (formerly Columbia) also are in that club, along with Lakeside Medical Center in Belle Glade.
Three other hospitals didn’t break 60 percent occupancy during 2013’s first quarter: Delray Medical Center, Boca Raton Regional Hospital and Wellington Regional Medical Center.
Bethesda’s chief financial officer, Joanne Aquilina, said the hospital remains financially strong.
“We still have a very strong balance sheet, over 250 days cash on hand, even with the additional debt we incurred,” she said.
“All industries experience cycles in business structures,” said Robert Broadway, Bethesda’s vice president of corporate strategy. “While there are challenges we are going through today, there are also opportunities.”
Hospitals throughout Palm Beach County saw weak occupancy rates in the first three months of 2013:
Bethesda Hospital East: 73.7 percent
Bethesda Hospital West: 48.7 percent
Boca Raton Regional Hospital: 57.2 percent
Delray Medical Center: 58.2 percent
Good Samaritan Medical Center: 35.4 percent
JFK Medical Center: 82 percent
Jupiter Medical Center: 89.4 percent
Lakeside Medical Center: 45 percent
Palm Beach Gardens Medical Center: 72.5 percent
Palms West Hospital: 78.2 percent
St. Mary’s Medical Center: 63 percent
Wellington Regional Medical Center: 59.9 percent
West Boca Medical Center: 64.9 percent
West Palm Hospital: 47.6 percent
Source: Health Council of Southeast Florida.