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Published: 01 May 2018 01 May 2018

[Editor's Note: This is part 1 of a potential multi-part series on the forum with GRMC staff members.]

By Mary Alice Murphy

The Grant County Commission continues its process of investigating options for Gila Regional Medical Center. The process, using Juniper Advisory Services, has been going on since last year.

The commissioners have traveled and spoken to representatives of hospital management companies, to experts in hospital oversight, as well as making visits to other hospitals.

Commissioner Brett Kasten said: "We don't have any final or firm offers. The whole original plan was to solicit partners and let them tell us what they think about Gila Regional. It could be May or June before we make any decisions. We should be able to close the process up by mid-June."

Commissioner Alicia Edwards said the process the commissioners are following is the same "process we did with Gila Regional as with the other suitors." They heard a presentation from the hospital last week.

She presented a selection of PowerPoint slides with information the commissioners have gleaned from their process so far.

The roles and responsibilities of the Board of Commissioners is to determine an ownership structure best able to: 1) provide GRMC long-term financial stability and security; 2) provide GRMC the capital needed to continue providing high-quality care; 3) ensure GRMC's ability to continue providing strong, local access to range of important health care services, while doing what is best for Grant County.

The partnership exploration process to date has been the conducting of an in-depth market review and analysis, conducting a potential partnership search, and considering GRMC independence. "We have made no decisions to date."

Edwards listed the next steps, which include listening to physicians, which was done in closed session on April 25, 2018, and holding forums like the one with staff and that evening with the community.

Next steps include further conversations with Gila Regional and potential partners. "We want to ensure: access to quality care; physician and caregiver security; local voice in healthcare; service lines continuing and growing; and facilities renovation.

Goals include providing resources to enhance and expand facilities and services; recruiting and retaining physicians, nurses and other caregivers; ensuring access to capital and financial stability; strengthening population health programs; and providing first-class cancer care.

One slide stood out with Today's Healthcare Reality, that more than 80 percent of hospitals are planning to pursue alignments with another hospital or system.

Gila Regional Medical Center is the only non-critical-access, government-owned, independent hospital in New Mexico out of 38 hospitals.

 nm hospitals

GRMC today is a top 100 rural and community hospital, it has a 98.9 percent quality score in overall core measures and has zero debt.

Kasten said the process has made the commissioners "a lot smarter."

Although GRMC has no debt, it has been in negative territory in revenues off and on for the past six years. However, the cash flow has been positive since December 2017 and through March 2018. The challenges for the hospital are its poor physical plant condition; it is low in days of cash at 43, with industry similar hospitals having 214 days of cash; and its operating margin fiscal year to date is a negative 2.4 percent.

On the positive side in operational risk, Gila Regional has strong physicians and caregivers and good quality care. It has challenges in recruiting and retaining high-quality physicians and caregivers because of geography and wage rates. Sixty percent of Gila Regional's gross revenue is reliant on government payors, especially Medicare and Medicaid at more than 60 percent.

In market risk, on the positive side are the 36.6 percent inpatient market share and six percent local unemployment rate. Challenges include a declining market share trend; a decreasing population trend; a 25.3 percent population of people 65 years of age or older; and an average household income of $38,890.

In access to capital, the positive is that the hospital has no debt. The challenges include that general obligation bonds, revenue bonds or a tax levy are the only way to access needed capital. The hospital has limited debt capacity without making taxpayers liable. Because of financial, operational and market realities and risks, there is no reasonable path to the bond market. GRMC revenue is about $71 million a year, whereas the industry revenue average for peer Moody's "A" rated hospitals is about $567 million.

Access to services and critical access hospital considerations include quality, with GRMC scoring 98.9 in quality, with other New Mexico full service hospitals averaging a rating of 96.5 and NM critical care hospitals at 91.8 percent. Other NM critical access hospital average a revenue of $7 million to $66 million and GRMC stands at $71 million. A major risk factor in going to critical access is that the program and funding levels require ongoing Congressional support and approval.

Although the Commission has received varied interest from a diverse set of suitors, with some interest in the New Mexico market and Gila Regional turnaround potential, a large geographic market, a hospital providing needed services to the community, and the opportunity to stem outmigration are positives. Some have replied that GRMC is too small, outside of core markets, too risk averse, has a historic troubled financial performance, and large non-profit systems don't want to enter a new state with one hospital in the less than $100 million range of revenue.

Edwards promoted the response cards and a survey from those interested in giving input into the commissioners' decision.

She opened the session up to questions from Gila Regional staff members. They will be covered in a future article.