"We're going to come together as a board," Dr. Robert Gross, DO, and first vice chair of the Kern Valley healthcare District board of directors, said regarding the passing of the motion to review the pharmacy financials before making a decision to close.
Measure twice, cut once
Measure twice, cut once
As was already reported, the KVHD board of directors denied a motion by board member, Bob Jamison, to begin wrapping up the business with the pharmacy, with a second motion being made by Dr. Gross to have the board carefully review the situation before closing the retail outlet.
Gross said the board needs to do some teamwork and make sure that this is the correct decision, as many questions were asked as how this will effect not only the community, but employees as well.
Jamison and Chairwoman, Kay Knight, exchanged their views regarding the decision.
"We've just had a very rough financial report for the district that says we're losing money. If you want to look at it on an emotional side, or belittle the messenger, keep in mind all you're probably doing is drawing out the inevitable and making matters worse," Jamison told Knight.
Jamison went on to say the pharmacy has been losing money for the last four years, and now with complaints and inability to service the customers properly, he said he sees no reason to delay.
"But it used to serve the public well," Knight replied.
She went on to say, "Our surgical services loses over a million dollars a year."
"We're not talking about surgical services we're talking about a pharmacy," Jamison retorted.
"We're talking about losing money and what we are going to do to prevent losing money," the chairwoman specified her concerns.
CEO, Tim McGlew, who, with help from Chet Beedle, (they're practically finishing each others sentences now) recommended to the board that the pharmacy be closed based partially on some interesting data obtained in an old consultant report.
"If we cannot do the service right than maybe we should not being doing this," McGlew explained. (Same logic would then apply to all other departments?)
"The bottom line is we've been losing money for the last, you know, four or five years, in the pharmacy, as Chet brought up last time, most of this came up as a result of the advent of Medicare Part D," McGlew reiterating what Chief Financial Officer, Chet Beedle, had been saying.
Beedle explained that the prices charged for medications were dropped down at that point, starting a cycle of losses for the pharmacy. (Well, I guess we will have a chance to look at this up close and find out if indeed that is the problem)
We need our pharmacy, says the Chairwoman
Not quite ready to give up on the Mt. Mesa Clinical Pharmacy, Knight reads off her reasons for wanting to hold off on closing the outlet.
Her concerns included the lack of availability of services on the "West Side Story" side of the lake, and employees who have put in years of work at the small facility.
(Yes, as I said in the Sept. Finance blog, there was an excuse given that the reason "The Drug Store," pharmacy in Kernville was able to remain profitable was due to the money people with power and influence living on that side of the lake. This was later disputed and laughed at by the owner of that pharmacy, who said it was just the opposite as all the medical providers are on this side.)
"I would hate to see our pharmacy close," she said was her opinion, "over the last few years the retail pharmacy has had very profitable months, I believe the allocated overhead expenses associated with the retail pharmacy are high."
She went on to say that the accounting system might be a place to start looking for answers."The losses we're experiencing are not from any mismanagement of the pharmacy or any wrongdoing within the pharmacy, but the losses as I see it are associated in the whole method of allotting overhead expenses from other departments to the retail pharmacy."
(I guess we can find that out now, as a team.)
Knight told the audience that the money to pay the long term debt impacted the finances of the pharmacy. "To service that debt we had to scrape pennies from anywhere we could."
Beedle said earlier in the year the debt was going to be a problem, he warned us. Then, however, he retracted that at the first finance commit me meeting with our then brand spanking new CEO, Tim McGlew. He then shocked me by saying it was already paid and it wasn't a big deal.
At that meeting Beedle said rather offhandedly that the 1.1 million was paid without dipping into reserve account required by the insurer Cal Mtg. We found out later that 150K was taken from reserves to make the payment.
Beedle and I ended up in a heated exchange that day as I told him that he said this all on video. Again, he said that he didn't say that. (We're cutting the videos this week and will probably fill up our Youtube site with some really fun stuff.)
Now that Beedle is becoming more open about the financial problems, as he has projected a serious problem paying next year's August bond payment. He even intimated that we could potentially have to use our insurance to make the bond payments. Our insurance is Cal Mtg. and once we do that we may as well give them the rest of the hospital. (Well, they pretty much have it now)
Our CEO, has experience with Cal Mtg. as, if I remember correctly, his last employer had more than 115 million in loans insured by the OSHPD offspring. (Office of Statewide Healthcare Planning and Development: see blogs regarding Cal Mtg. and its relationship to OSHPD)
I'll be interested to get his views on the long term debt situation.
You can't just close it, there is a process
Robert Knight, continuing his service to the healthcare district, this time from a seat in the audience where he is seen at every meeting supporting his wife who is the chairwoman.
Knight raised his hand and made a comment.
"This is a district hospital and it is tax supported by people who live here and actually earn their living here, not somewhere else. And I believe there's a section of the law that requires that you cannot just lop off a department, there's a process you have to go through which includes, I believe three different months, weeks, public notices."
The CEO responded that Mr. Knight was "right," saying that this is his first job with a public healthcare district and he deferred to Knight's experience. He said he will confer with counsel as to the process.
Knight went on to say, "It won't hurt to look at these numbers, there's a lot of, when you look at Mr. Beedle's numbers, there's a lot of stuff in there that doesn't make a lot of sense."
The options
Keep the pharmacy open and lose money, Beedle's report suggests. Cut back on staff, keep a minimum inventory with mostly generic medications, move skilled nursing facility pharmacy services into hospital, hours remain same except for being closed an hour for lunch with only one pharmacist on duty.
(That just gave me the warm fuzzies, what's the second option?)
Set a date to close the pharmacy to the public. Inventory liquidated or moved into hospital pharmacy. Employees and covered board members can use the internal pharmacy.
Okay, what did you think of that analysis?
Even more impressive is the data used to create these two top notch options.
When I looked and saw "The Casey Report" being used as a tool for justifying these two skimpy scenarios, I knew instantly the board was correct to hold off any action on this issue so this could be properly analyzed.
What is the Casey report?
The Casey report was done in 2000 by a firm suggested by Cal Mtg who was getting really worried about the lack of funds provided on the debt, but even more so, about the talk of bankruptcy.
Casey made some strong claims in the report, but unfortunately some of the data was not completely accurate, which caused the KVHD board to dismiss it as a source of advice.
Though some suggestions contained in the report, I believe, but I'll have to recheck, led to the closing of the Kernville clinic along with a cardiac rehab type of business. (Gee, a cardiac rehab in a senior community, that couldn't make money, could it?)
I have this report, and since we are now using it as viable data, I'll go ahead and tell you why it was given to me.
Former CEO, and currently a defendant in our felony elder abuse case, Pam Ott, and Bob Jamison gave it to me to impugn Robert Knight as the cause of all the financial problems at the hospital.
There is a reference in the report that the CEO, Knight, needed to be fired.
But the consultant was never hired and there was some question as to the accuracy of the report itself. Now, suddenly it resurfaces and is being taken into account as to the decision with the pharmacy???
We have an obscure report which was a one time deal, as the former KVHD board members chose not to hire on this company. And yet, here it is, an outdated, antiquated, analysis being used, I guess seriously which is hard to believe, to make a decision on the pharmacy which services a good portion of the community. (I'll say no more and just keep rolling my eyes)
As we begin to make decisions as to the future of the hospital and its potential services, business opportunities, there is the specter of that debt which makes it tough to believe much can be done without addressing this issue.
Like I said, I made a proposal to Cal Mtg. back in February I think, and both chairwoman Kay Knight, and Assemblywoman Fuller, were interested in trying to negotiate with the pseudo government agency which is actually allowed to make a profit. (That is the problem, the state is not going to fight about a profitable endeavour such as Cal Mtg. But it's the way they have become profitable which I have addressed and will revisit.)
However, CFO Beedle, talked Mrs. Knight out of trying to cut a deal for some financial breathing room, and the whole effort was stopped short.
Now, at this recent meeting, Beedle announced we could actually be using the insurance if we can't pay.
What about the pharmacy employees? What about the customers?
Chief Clinical Officer, Cynthia Burciaga, addressed Chairwoman Knight's concerns about the employees at the pharmacy.
"Miss Chair, as far as the comment regarding losing employees or having them lay off employees in the retail pharmacy, our open position report is available on line as well as posted in other areas, and there are many positions in the hospital where we can absorb the employees," Burciaga told Knight. 
"So you're going to take care of them," I asked her.
Burciaga said she didn't want to lose any of the "valuable" employees and that they could apply for other positions at the hospital or be cross trained into something else. She thanked them for their service as they have had to deal complaints from the public and uncertain hours.
"They've been so good about cutting back their hours to help out, but still maintaining their benefits," she said.
(I'm sure if others a little higher up would pitch in their hours or cut some of their money, it would help much more than taking it from the little guys. You just don't hear the top administrators talking about taking cuts or even cutting their hours at this hospital. How about a furlough program?)
How to pump up the volume
How to pump up the volume
Marge Swendleson, who could be called a community advocate, stood up and addressed the issue of insurance companies sending patients down to Bakersfield or elsewhere when they can have the same services available here.
She said a phone call to the HMO or insurance company by the patient explaining that the services are available close to home can get results.
"They can have the procedure done here and it takes is a phone call because I've experienced it and had nothing but good results."
McGlew agreed with her, but said that the hospital can't do that for the patients.
He explained, the hospital has contracts with these organizations, but they just refuse to let the district do the volume here.
"It's gotten to the point now that just a simple chest x-ray, they will require them to go to Bakersfield to get that. Clearly, the time down and back is exorbitant for a simple procedure like that."
Swendleson said people just need to make a stand, make phone calls, write letters and things can change. She said she wrote a letter to some editor about it.
McGlew said he has contacted the department of managed care to review the situation as well as sending requests for help from two other state agencies.
The CEO said its a difficult situation, "but we will rattle some swords."
Dr. Gross responded, "it shouldn't end with the letter to the newspaper, which I think is a really good idea, but there's a law on the books that basically states that these insurance companies have to provide all services within thirty miles from where they are insuring you at. So, I suggest you write a letter to your representatives as well...letters like that help, they can help an awful lot."
Is this story over with yet? No.
McGlew reported that he attended the annual California Hospital Association meeting recently and that some good news came out of the event.
"The primary purpose of that was to begin putting the network together of the critical access hospitals throughout the state of California."
He said getting this group of similar small districts together will help as far as advocating for the special needs of these critical access hospitals.
As McGlew has talked about getting more specialists up here to create more services and more volume, he said he found out at the CHA meeting, that the telecommunications or telemedicine, will be available soon by way of money from a stimulis package.
"They announced at the meeting that they had already proceeded with the purchase of that equipment for every one of the hospitals. So, that will be coming shortly, that was very good news."
McGlew also made mention of the fact that all the CEO's in the new network, have no retail pharmacies. So, we are all alone in this?
Where's my flu shot?
I guess we're all asking how we can get flu shots this year as the hospital has not recieved it's shipment as of yet. And the only shipment they are expecting will cover patients, staff, and residents of the nursing center.
What happened to the drive by flu shot clinic? I don't know, but I will find out. I need to speak to Public health and find out what has happened.
It's only speculation, but could there have been a problem paying for these vaccinations? Let's find out together.
I need a flu shot, but I will wait until I know our elderly residents and children are taken care of first. And if I or anyone else have to go to Bakersfield to get a flu shot, then we have sunk to our nadir of service.
Odds and then the end...
In his CEO report, McGlew said that they will be going to all the department heads and do a departmental review. Beedle said they haven't done that, but they always kept in touch via reports and records.
Out of the blue, McGlew mentioned a skilled nursing facility policy which prohibits hiring anyone convicted of elder abuse or neglect type issues. He said it is only a SNF policy now, but would like to see it district wide.
Second vice chair, Brad Armstrong, who has been on the board for more than 20 years, through many a disaster including the construction project and the SNF elder abuse disaster, voted with the other three board members to take a look at the pharmacy one more time.
"I most certainly don't want to make the wrong decision." And I concur.
Two new Obgyn's will be arriving in the valley at the end of October as part of the push for specialists.
And "The Drug Store," in Kernville should be keeping a close watch on the pharmacy situation here as it will impact there business as well: they're going to be making some good money if our pharmacy goes down. And they can even expand their delivery business to make it a convenience.
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