Stevens Hospital is turning its doctors into mini-MacGyvers, forcing them to make do with nickels, dimes and band-aids, Stevens CEO Michael Carter says.
Recently, the hospital’s Chief Medical Officer came hat in hand to Carter’s office after quick-fix solutions finally failed with the urology department’s crucial scope.
Half the scope’s field of vision was blocked. A new, $15,000 machine was needed. Carter greenlighted the purchase. “No questions asked,” he said.
But the scope problem highlighted an issue — Stevens’ lack of cash — that is endemic, Carter said. Even relatively small purchases require group decision making.
Taxpayers could be asked to foot a growing hospital bill, officials said. It is possible a new levy could be on south Snohomish County ballots in November 2009, Carter said May 12.
In the last five years, the public hospital has fallen $18.5 million behind in capital and infrastructure improvements. In the last 20 years, the hospital has not spent $73 million administrators say it should have.
The hospital’s emergency room handles over 40,000 people a year, even though it was designed for 24,000, officials said. A new ER could cost $20 million to $30 million.
Last year, the hospital spent $167,000 on a campus master plan which called for a new $400 million hospital — and not necessarily one in Edmonds.
“The scope is a small picture of what I think is a big problem,” Carter said from his office May 12. “We have a lot of stuff which is about ready to show only half the picture. We just don’t know which day that is going to happen.”
In a competitive market where other hospitals like Providence Everett Medical Center and Seattle’s Swedish Hospital are actively courting not only Stevens’ customers but its doctors, and where government payers are putting the squeeze on everybody, it is impossible for Stevens to make that money up through regular operations, Carter said.
Stevens Hospital needs a cash infusion, said commissioner Fred Langer.
“One thing that is clear to me is that we are going to have to have a partner as we do capital acquisitions,” Langer said. “The question is if that is the community, or another hospital, or both?”
The community around Stevens pays $4 million a year in taxes to support the hospital. Evergreen Hospital in Kirkland collects $24 million a year, though. Renton’s Valley Medical Center gets $18 million a year in tax support, Carter said.
Stevens’ taxing district includes 80,354 voters in the cities of Brier, Edmonds, Lynnwood, Mountlake Terrace, Woodway and surrounding unincorporated areas, the Everett Herald reported May 11.
The hospital’s future and its finances were the focus of a day-long board retreat May 8 at Stevens Hospital. All five commissioners and most hospital administrators attended.
Administrators are planning another retreat in June or July, hospital spokesman Jack Kirkman said.
“Organizations that have limped along are realizing now that they cannot limp along forever,” said Michael Hammond, a partner at the investment banking firm Shattuck Hammond Partners, which is consulting Stevens.
While Hammond did not advocate for any particular solution, he said merger possibilities existed.
For instance, Swedish has been looking to expand both north and east of Seattle, Hammond said.
No merger talks have taken place between Stevens or any other organization, Carter said May 12.
In the changing world of healthcare, though, hospitals feel pressure to get bigger, Hammond said. Size helps hospitals negotiate with insurers, he said.
“When you go to the (negotiating) table, you’ve got to be able to say, ‘You have to have me,’” Hammond said.
That sort of talk made some commissioners nervous, they said.
While the hospital’s finances are grim, they are not yet a crisis, said commission president Deana Knutsen, who was first elected to the commission in 1999.
Most of the information presented at the open house focused on a merger, she said. A merger would cost the community control over its local healthcare, she said.
“Since I have been here, it has been about ‘Should we partner?’ From the time I walked through the door, that has been the case,” Knutsen said May 8. “I don’t want to be pushed against a wall that is – it is there – but it is not there tomorrow.”
“This specific issue is a permanent change and an irreversible change,” Knutsen said.
Newly elected commissioner Kim Cole echoed Knutsen’s reservations.
The open house was “heavy” with partnership talk, Cole said.
“I feel like we are nowhere near where we can actually look at (that),” she said. “I am very concerned about some critical things – patient perceptions and public relations. To not improve upon those things and see where that leads us, to not get our solid footing (is a mistake).”
Stevens was in the 6th percentile nationally in its most recent patient satisfaction survey.
Its market share is low, and while employee satisfaction has rebounded to the 60th percentile in 2007 – from the 4th percentile in 2006 – the hospital needs work in its non-financial areas, Cole said.
There is truth in that, but Stevens is running out of time, commissioner Chuck Day said. Commissioner Bob Meador agreed with Day.
“There are competitors out there who are very aggressive and they are on our doorstep,” Meador said.
The hospital’s financial position has left it very little wiggle room, Chief Financial Officer Rick Canning said May 8.
A healthy hospital has about 120 days worth of cash on hand. Stevens, by comparison, ended 2007 with only 31 days on hand. That is much too low, Canning said.
The hospital’s hands are tied, he said.
“Anything large or dramatic we are going to do is going to require outside financing,” Canning said. “Either that is with the voters, or it is some arrangement with another organization, where we are not just standing alone.”
Reporter Chris Fyall: 425-673-6525 or cfyall@heraldnet.com
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