[Editor's Note: This is the final of a multi-part series on the Grant County Commission work and regular meetings April 17 and 19, 2018.]

By Mary Alice Murphy

The first presentation at the Grant County Commission regular session of April 19, 2018, featured Gila Regional Medical Center Chief Executive Officer Taffy Arias and Chief Financial Officer Richard Stokes.

Arias thanked the commissioners for allowing the Gila Regional administration and Board of Trustees to present its strategic plan in a closed session between the groups.

"We need to do our strategic planning together each year," Arias said. "Hospitals are surveyed every year. They are evaluated each year by the Joint Commission for Accreditation, Health Care, Certification (JCAHO). The Joint Commission was just here for two grueling days. Today (April 19) is their last day. They work in tandem with CMS (the Centers for Medicare and Medicaid). They will give us a laundry list of things to do. Our caregivers have been able to answer many of their questions. We have already started with some items for 2019."

Stokes started off with statistics from March. "We received net $8.7 million, with $5.3 operating expenses, leaving us $3,000,060. Our overall loss for the year is down to $1.158 million. The hospital made $400,000 on its own."

The large amount received was due to the 1115 waiver. "We received a letter from the state that for uncompensated care in 2016, we had been underpaid. It was to cover the gap between what Medicaid paid and our actual costs."

He said he recognized $2.7 million on the February report. He said the letter addressed multiple issues, including the 2018 uncompensated care, which will pay the hospital $8.6 million. February was the first quarter receipt. "We also received $285,000 in quality incentive funding. The letter notified Gila Regional of $3.8 million underpaid in 2016. On April 17, 2018, we received a check for $6,264,146. Unknown to me, because usually the state tries to recoup the money from those hospitals that were overpaid, the state paid us up front. This is just an overview. We go into more details in the Board of Trustees Financial Committee meeting."

"Our KPIs (key performance indicators) showed 181 patient admissions, 24 more than last year for the month," Stokes said. "We were down 106 patient days. That's a good thing. The average length of stay was 2.5 days as opposed to last year. The Emergency Room was down 73 and we don’t know why. Our outpatient numbers were down 190, out of 3,515, but that's not significant. The clinic practices were up 329 over last year. Surgery was up 60. Oncology was down, but we are working to ramp it back up. Births were up four."

The hospital collected $4.9 million in February, about $220,000 more than last year.

He noted that days in cash for February were down to 43, compared to 67 last year. Days net accounts receivable were 71, up 24 from last year. "There are some issues we need to look at and are addressing. We were at 50 days accounts payable. Thirty to 40 days is standard. Our daily expenses were $16,000 less than last year, and we are bringing in more revenue per day this year, with daily revenue up about $15,000, giving us about a $30,000 more per day revenue. Our FTEs (full-time employees) are down 21 from last year. We are in the ramp-up phase for oncology."

He noted that although the days in cash is not going in the direction he would prefer, "in March, we went a bit under 40 days of cash, but it was by design. At the end of the month, we did a large accounts payable payment, because we knew we would be getting a payment in April. I haven't figured out days in cash yet, but we should be close to 80."

Stokes said the hospital would be careful in how it spends the extra money received. "In 2013, the hospital was down $9 million; in 2014, we were up $1.2 million; in 2015, we were down $3 million; in 2016, we were down $4.3 million at the end of the fiscal year; and in 2017, down $2.6 million. This year, we are projecting ending about half a million underwater, but we are going to try to get closer to zero loss. In December of 2017, and in the first three months of this calendar year, we are showing profits. We will exceed our revenue budget in April, so the picture is looking brighter. We are initiating how we bill clients. It kicks off today (April 19), with another project next week and the week following to improve the revenue cycle. It's one of the top five issues in hospitals across the country. It can get away from you quickly. That's why we have to monitor and manage the process daily."

Commissioner Alicia Edwards asked if with the extra funding having come in, would the hospital be considering compensation for care providers.

"Our plan was to look at that this week," Stokes said, "but the Joint Commission walked in the door on Tuesday morning. Yes, compensation is one of my and Taffy's top priorities. That's one of the reasons why I have started hitting the revenue cycle as hard and fast as I can. The employees need a compensation adjustment. We will direct HR (human resources) to begin to address it tomorrow."

Stokes, to answer Edwards' question about how much it would cost, said a 5 percent raise for bedside providers would cost about $385,000 annually.

He explained that those who are bedside providers are the ones who provide direct care to the patients at their bedsides. "Those are our highest priority."

Arias estimated the number of nurses performing bedside duty is more than half and does not include administration and staff. She said HR would be doing wage analyses with other facilities for comparison to provide equity among the group. "We are going to make it fair for all our caregivers, but right now our bedside nurses are the most important. It should take about a week or so for the analyses."

Commissioner Harry Browne asked what the basis is for the quality payment.

Stokes said the state gives the hospital a menu of things to improve. "We chose two areas to improve on that we have to improve on. Based on the report we sent, we got the quality incentive payment of $285,000. Our Chief Quality Officer Tanya Carroccio will be making the evaluations for this year."

Browne also asked about how the contractor for billing was working out.

"They started about 45 minutes ago," Stokes said. "They will be working on the initial bill. The cleaner we get the initial bill, we will increase revenue. The in-house staff will be working on denials. We also have issues with Meditech. The responsibility of rebilling begins next week and for the business office, the week following."

Commission Chairman Billy Billings asked why the $3 million didn't show up in days in cash.

"We earned the amount," Stokes said. "We work on the accrual accounting method, not cash. We record the money this month. As we get cash, it will relieve the accounts payable days."

He said with the Joint Commission at the hospital that week and with the September audit, "we want to make sure we are following accounting practices. We can't spend all the money on accounts payable (AP). We have to take care of staff. That's our No. 1 priority. Some AP is paid up, some are 60 days out. Internally, we assign a category to vendors, of A, B, and C. If cash is tight, we pay the A and B vendors, with C being paid later. Thirty to 40 days is average for AP. We're at 50, so we have some work to do, but it's not as bad as I've seen it in other places."

Commissioner Gabriel Ramos said he was glad to see staff being a priority. "But what is happening with the new contractor in billing. Will current staff be kept or laid off?"

Stokes said he would be careful about talking about HR issues. "The staff has been notified of the changes. We are evaluating who has the skills we need. It will be dictated by HR policies and lot of state and federal regulations. It is not fair for our staff to read in the media about what may happen to them."

Arias said Gila Regional has a lot of vacancies that need to be filled. "Certain jobs, if people don't keep up with their skills, they can't do the job. Our hospital pays tuition reimbursement for people to keep their skills up and to improve them. Tuition reimbursement shows the commitment of our employees to keep working for us. But not as many take advantage of it as they should. It's free money."

Commissioner Brett Kasten asked if any of the extraordinary payment is recurring.

Stokes said the hospital will continue to get $2.158 million for the remaining three quarters, in July, October and January for uncompensated care. "The $3.6 million related to 2016 is not recurring, nor is the 2017 quality incentive payment of $285,000."

County Manager noted the county pays a match of $90,000 a quarter to the safety net care pool, "so you can get the $2 million a quarter." Stokes and Arias seemed unaware of the match.

Kasten said, as part of the process the commissioners are following in order to make a decision on whether to keep the hospital as is, develop a partnership with a larger group or even a sale, "we've been doing a lot of touring. I appreciate your doing a survey on salaries and that you are considering a 5 percent increase in salaries. We're finding that you're more likely about 15 percent to 18 percent behind on your bedside nurses, so it will cost you closer to $1.2 million a year to bring them up to what others are making. I'm happy to see you are working on Meditech. We're talked to a lot of people who use Meditech and none of those using it are very happy with it."

Stokes said he has talked to other using other systems. "No one is really happy with what they have."

Arias clarified that the 5 percent was a hypothetical starting point. "It's not for sure. We realize the costs will be closer to a million annually."

Kasten also said he would like to see the hospital get closer to 80 days in cash.

"My goal is 100 days in cash," Stokes said. "I want to be looking up at the 100 days in cash floor, but the organization also has capital needs. It's a balancing act."

Billings asked about oncology. Arias said a radiology oncologist would be doing assessments, with the target date of May 2 to begin radiology treatments.

Billings also noted that the hospital has lost about $18 million or more over the past six years. "You've presented a program to stabilize the hospital. This Commission is facing a tough decision on whether the hospital can remain independent or take on a national partner. In order for Gila Regional to thrive, you should be making $7 million to $8 million a year. How confident are you that it can happen, you can thrive and not keep losing money?"

"There are no guarantees," Arias said. "The best thing is to have a plan and to be able to weather the unpredictable changes. Today we could not infuse what we need. We have a plan, and if it is not eroded by outside sources, I think we will hold true to the numbers. We are ones to be moderate and play it safe. As we start on these plans, we are being aggressive on them."

Stokes said the projections are based on today. "I am confident, we can do them and exceed them within the next year. We have a lot of changes to address. Fifty-five percent of our business comes from government—state and federal. They can change things tomorrow. Medicare and Meditech pay all of us the same. I'm confident we can hit these numbers."

Browne asked when the hospital would have the Joint Commission report and when could it be made public.

"We get a tentative report today," Arias said, "and another formal report in a few days. We should get the final report within a couple of weeks by electronic mail."

Kasten asked when the capital improvement plan would be available.

"We are in process right now of building next year's budget," Stokes said. "There will be adjustments in the five-year capital improvement plan."

Kasten asked for a copy of the maintenance and capital improvement plans.

Edwards said the hospital believes it can thrive on $7 million to $8 million annually. "I did a back of napkin calculation that to bring up all your staff by 15 percent to 18 percent would cost $3 million to $4 million annually. At what point, given the capital needs and the needs for compensation parity, might the $7-8 million be reachable?"

Stokes said the hospital could see an improvement to $6 million to $7 million with fiscal year 2019."We could have critical access designation within about nine months. That will help." He said the Board of Trustees has authorized the 855 process for critical access, "short of pressing the button."

Arias reminded the commissioners that the hospital needs to keep a reserve.

Stokes said he would like to make an observation. "Ms. Arias came on board last June. She had built an amazing team of highly skilled leaders. This is the most talented group I've ever worked with at any hospital. She has assembled an excellent team."

Billings noted the $6-7 million does not include critical access.

Stokes gave as an example: "To do so many lab tests, you need this many lab technicians. I suspect we may find too many in some areas and not enough in others. It's a major project, but we will optimize for the correct number." He said for-profits have 40 percent to 45 percent the number of employees. Non-Profits have 50 to 55 percent, with government about the same.

"We maintain services that are not profitable, because the community needs them," Stokes said. "That puts us at a disadvantage, but it is the purpose of a community hospital. We will have a mechanism in place to tell if we are appropriately staffed."

Arias said: "I have a deep appreciation for the issues you are facing. I know your decision will be based on what is the best for the community. I'm delighted to know you have done such an in-depth deep dive to get an understanding of the enormity of problems ahead of you and us."

Public input first came from Cissy McAndrew, a local Realtor. "I wear several hats. I commend you for considering the retrofit for renewable energy. I encourage you to peer match with Silver City. That's why there is no longer a need for the Office of Sustainability. We have vendors and contractors who provide energy efficient services."

She also wears a hat as a member of the Gila Regional Collaborative Council. "I wasn't hearing the voice of the people. Juniper (Advisory Services, the group the Commission is working with to determine what best to do for the hospital) is doing PR. I'm looking forward to the community meeting. I want to hear the back and forth between the county and the public."

James Baldwin, resident, said he remembers attending three meeting on the hospital years back, held in the cafeteria of Gila Regional. "Two commissioners were present, and one sent his runner. All three voted to retain the county-owned hospital."

He also commented on the proclamation for the Continental Divide Trail Days. "I support this, but do you know what you are supporting? Tip and Mary Cowan and I have hiked Little Walnut up to the Cleveland Mine, but that's not the Continental Divide Trail. Your predecessors voted the CDT would be from the Floridas to Emory to McKnight to Granite Peak."

Carol Quandt said she wanted to talk about Holloman and how unreasonable the request was to fly 27 flights a day, 365 days a year, as well as to shoot 30,000 flares into "our forest. The chaff is aluminum-coated, and mid-air refueling is scary. Holloman is bickering with White Sands. I'm surprised this is not the main focus of the city council. Taos stopped it. We're the keepers of our planet." In tears, she said: "It's our responsibility to stand up for what's ours."

Patricia Ann Grauer of the Cosmic Campground said visitors come from all over the world. "It's the first international dark skies area in the U.S. We've been working on it since 2003. We have partnered with the Forest Service since 2016. It's working, and we need to have more attention paid to one of the darkest spots on the planet where the skies can be seen at night. You can't replace it. You can't redo it. That place will not stand up to military sorties day and night. The whole idea was to bring Catron County forward. It is making money for them. People can get gas; each person eats and stays there. People come through here a lot. It's a very worthwhile thing. We have kids who have never seen dark skies. Keeping this place safe is important. I gave a poster at the European Dark Skies Conference, so Europeans are coming now. It's a benefit for you, too."

Martin Miller, resident, read from a letter, which you can read at http://www.grantcountybeat.com/editorial/43435-letter-to-editor-on-grmc

McAndrew, president of the Regional Association of Realtors, said 2017 was the best year for housing sales since 2007. "We are starting to have multiple offers above the sales price. Our housing stock is balanced, with no new construction, except for custom. The cost of housing is going up, which is a challenge for affordable housing. Downtown is selling, although commercial loans are hard to get. Historic zoning can be commercial, retail or residential. The Fire Department is helping potential customers understand the regulations. The majority of people coming in are looking at the climate and the quality of life. Some are waiting to see what will happen with the F-16s and the hospital. Many are moving from Colorado, for the rural setting. They are coming from California. We are also seeing a good flow from northern states looking for warmer weather and from Florida for those who are tired of hurricanes. The CDT is becoming an economic driver. We are seeing through hikers. They get to meet our people and tell their families and friends what a great place Silver City is."

Margaret Begay of the Surveillance Program said: "We are the eyes and ears for the judges. We are a post-trial service. We had 611 under surveillance in July, 455 in August and 647 in October. We also had a November spike. Most of our clients are going up through Magistrate Court and some from District Court. Violations can be positive for drugs, out of their work zone or home zone. We get GPS notices when they leave where they are supposed to be. There are immediate sanctions and consequences. For juveniles, we had 130 visuals this past March and 20 attempted. The GPS reduces incarceration costs. It's an important program. The adult piece will be a model for the state. It's a work in progress. We meet regularly with the judges and with Carillo and Andazola at the Detention Center."

Chris Arvidson of JPPO said 22 juveniles are under surveillance throughout the county. "We also have state provided ankle bracelets, in addition to the county ones. Our numbers have been down, although the courtesy or self-referred have maintained their numbers. If there are violations, we set up a system for formal intervention. We average 20 per month and will continue to collaborate with the judges and jail."

The rest of the meeting was covered in http://www.grantcountybeat.com/news/news-articles/43871-grant-county-commission-hears-from-financial-adviser-041718