Photos and article by Mary Alice Murphy

Gila Regional Medical Center Board of Trustees Chair Dr. Fred Fox opened the meeting.

He commented on the ribbon cutting for the grand opening of the Women and Newborn department, which had taken place immediately prior to the meeting. "It's beautiful up there."

He recognized several hospital staff members for their years of service:

Michael Harris, certified nurse practitioner, has, in addition to many additional years serving the hospital in various capacities, served five years at the Family Practice Clinic.

Mary Cobb has served 10 years in Environmental Services. Fox noted she is part of the hospital staff, all of whom who are part of the family, the team.

Steve Garcia has served 45 years in Cardio-Pulmonary services at present, although Fox said he has served in many capacities in the hospital, always putting patient care first.

Garcia said he loves being around people and helping and caring for people. "That's why I got into the medical field."

Fox commented: "The other thing, Steve, is medicine has changed so much, and respiratory therapy has changed, and you have done an excellent job of educating yourself and staying up to date on the care of patients."

Board Secretary/Treasurer Pat McIntire chimed in: "He also
helps in educating Student Nurses and the hardest, educating physicians. Thank you."

The next item on the agenda addressed choosing board officers for the year.

"So tonight, we're going to do that," Fox said. "We have three officers—Chair, Vice Chair and Secretary/Treasurer. Is there anyone who would like to nominate somebody for those petitioners or nominate themselves"

Fox was nominated to continue as chair, Betty Vega as vice chair and McIntire as secretary/treasurer. "So we have one person nominated for each position who are currently in office."

They were voted in unanimously.

Fox asked if anyone wanted to serve on the Finance or Contract committees who was not already serving. "If not, I would like to propose a motion that we continue with the same appointments to those committees." No one wanted changes, so the vote was to retain the same members in the same committees.

The trustees addressed the consent agenda, with the first part being all the governing board and committee meeting minutes.

The Consent Agenda also considered a number of agreements and resolutions.

They included
Consideration for physical practitioner employment agreement for the cardiology clinic. That person would serve in the cardiology clinic five days a week, with the start date to be determined;
Consideration of a fifth amendment to master license agreement with MCG health LLC.for a three-year agreement for software application., with the start date September 2024 and expiration August 2027. The software application is for case management and quality department;
The next one considered an amendment to a master services agreement for AVEC Health, a Coronis Health Company. That one is the six-month extension of a current contract from October 2024 to March 2025 and they provide GRMC with revenue cycle services;
The next one is consideration for service agreement for echocardiography unit with Philips Healthcare for a six-year service agreement for medical equipment. Its start date was is June 2024 it expires June 2030. It's for the echocardiogram cardiography unit;
Consideration for service agreement for two Mini- C-arm instruments from Fuji Health for the orthopedic clinic. It's a five-year service agreement for medical equipment. The start date is November 2024 expiring November 2029. The hospital has two Mini-C-arms that were purchased in 2023;
The next point is consideration of a consulting agreement for Stroudwater Associates to provide strategic advisory services. That's a consulting agreement to provide advisory services for management services;
Consideration of resolution 2024-19, an agreement which is for approval of Southwest Mexico Council of Governments. It's a one-year agreement to continue being a member of the Southwest New Mexico Council of Governments for fiscal year 2025;
Consideration for resolution 2024 -20 to engage Rebecca Kenny of Madison, Mroz, Steinman, Kenny and Olexy PA as outside counsel for the Board of Trustees; and
Consideration for resolutions 2024-21 and 2024-22 both of which are banking signature authorities which would remove Tim Johnson and add Leonard Binkley.

The Consent Agenda was approved

With no old bsiness, new business consisted of two resolutions, 2024-34 , the agenda budget for FY 24, with the net surplus for the amended budget at $2.9 million and the original budget was pretty much that amount within about $50,000 difference and less than 2% so that's why the hospital is revising the budget. We have to send that off to the state.

Fox said the board has to parse out these numbers by quarter. It's in the statute. And therefore, "we'll go through this quickly, go to the top."
Interim Chief Financial Officer Binkley reported total operating revenue, which increased about $8.4 million from the original budget, or about 10% and looking at expense line, expenses increased by 6.9%. The biggest increases are in the non-operating expenses, they're up $175,000, which is about 3.5%. And total non-operating revenue is down $1.3 million and that's because in the original budget, the hospital put some grants in there for about $2.6 million and the employee retention credits about $1.3 million so "we budgeted that in the original budget, but we came in a little under that, so that that's the biggest increase. But you add all that, all the numbers together, wejust about $50,000 missed to our original budget, which is quite good, I think. So we're on track. We'll send that report to the state, probably Thursday."

Fox had a couple of questions. Interest expense, $51,000, its less than the original?

Binkley said that was a good thing. "It's $877,000, which is under what we spent in the prior year. We come in quite a bit better than that overall. It's just a $50,000 difference. Bottom line, performance wise, based on your input, we'll go ahead and file the paperwork."

Fox had a question on operating expenses, two major increases were purchases, services and supplies.

Binkley said they were a result of increased outpatient services and included the cancer drugs, the expensive chemotherapy drugs. The other increase is in purchase services, which are the fees the hospital pays various vendors.

Binkley also noted the increased revenue from outpatient at the top, which had gone up in excess of $25,000 that was outpatient. "So I'm not sure if that's part of the cancer center that might be under our clinic review, but that extra revenue came from increases in outpatient volume."

Board Member Will Hawkins asked about the discounts and allowances

Binkley sad revenue deductions run about 35% of gross charges throughout the year and are a result of the volume growth in patient revenue. "Our patient revenue went up $22 million and discounts and allowances went up about $12 million with bad debt write offs. The discounts and allowances were not just the discounts from the vendors. No, it's the difference between what we invoice, and what we are paid by our payers. Big increases there Medicare. We had some workers comp in there. It's just a hodgepodge. Again, the increase is $11.6 million in total. It's about 8.3%., It includes Medicare. and managed Medicare, which is about 51% of our business. Medicaid and managed Medicaid is about another 20% of our business."

Scott Manis, Health Tech, the managing company for GRMC, said: "My question kind of leads into that last part of the conversation you just mentioned, when you're looking at the bad debt expense, and the trade off when you see the $4 million going from $2 million. Is there a correlation to Medicaid or Medicare not being filed, or anything associated with bad debt from a timed out perspective? The biggest chunk of that bad debt is part of getting the payments from those who self-pay.We have a self-pay discount that's available to our self-paying patients, but most of it, quite frankly, times out and we don't collect much on the self-pay patients. It's basically double from our budget. We hope that we can collect more. It's hard to get that. It's hard everywhere I go to get that self-pay money."

He said it depends on when the claim is processed, but generally if it is not paid within 120, it is considered to be bad debt.
It's strictly the patient responsibility. So it could be unpaid Medicare coinsurance, but that's the patient's responsibility.
Some hospitals allow for over 120 days, even to 280 days, but it's still problematic.

To a question if the hospital has any kind of counseling services, the answer was yes from Manis. "It's the same since I was here for the first time, sometimes you get promises to pay. It's rare that you will get a self-pay payment, and they pay you every month. It's just really tough to collect money from that financial class."

A board member asked what the difference was between self- pay and charity care?

Chief Executive Officer Robert Whitaker said: "In order to qualify for charity care, you have to meet certain criteria based on property levels. And again, our financial counselors have all that stuff and are in compliance. Quite frankly, patients don't qualify most of the time. They just don't fill out the forms. It's not always done ahead of time. Somebody might show up at the ER and get services. We identified that they might qualify for charity care, but they have to be willing to share their personal financial information to qualify for it, and sometimes people just don't follow up and bring that in We want it to show actually at the charity care level. We make every effort possible do that,
following CMS (Centers for Medicare and Medicaid and accounting rules. We have to follow certain steps in order to put that in the charity care policy. And if a patient doesn't go through that process, we can't do that."

Fox asked about charges that payments that are denied by third party payers or insurance.

Binkley said it usually goes under discounts and allowances.

Trustees approved the amended budget and went on to the discussion on the capital and operating budget for 2025.

Binkley said the hospital finished at $92.4 million for fiscal year 24 and "we've got a budgeted increase to $96.7 million for fiscal year 25 operating expenses, because this year we were at $91 million. When we look at non-operating revenue or expenses, we finished the year at $1.5 million below budgets, and we're budgeting $2.8 million. And so our bottom line net surplus that we are budgeting for fiscal year 25 is 3.3 million."

"Let's start with the expense line here," Binkley continued."Our GPO partner gave us the percentages on the purchase service increase. They're recommending 3.3% increase for supplies, 2.3% for utilities, 3% increase in wages. We put about $2 million in above our 24 run rate in the fiscal year 25 budget, representing 8.3% insurance line on the income statement is up about $2.1 million and we have actual numbers that we got from the insurance companies, so we feel really good about that number. On pharmaceuticals, we got that from Cardinal and Kathy Chang and Cardinal said 6.8% increase for overall pharmaceuticals. And as I said earlier, the high, high cost cancer drugs are really pushing that up. too. So as far as volume increases, we were very conservative. When we put these numbers together, we didn't say the growth was going to increase drastically, in admissions or outpatient visits or surgeries. You can see there that acute admissions we're budgeting 3% increase from the prior year. Daily, using 24 numbers, and that's about 32 admissions higher than we did last year. Swing beds were projecting two per month or 24 on an annual basis. In 24 we had seven or maybe eight.

"We said newborns will be flat We increased ER visits about 3% or 500 visits, outpatient visits up 1.5% percent. Surgeries, inpatient surgery, 5% or 16 surgeries. Outpatient surgeries and scopes are up 12 so you can see that those are small increases. And we wanted a budget that we felt good about and that was certainly achievable. We didn't want to over promise or not underperform, so we did that here.

"You see the $2 million in there for salary, wage increase, $2 million increase in insurance, but overall, very modest bottom line performance. We'll talk about the fixed capital budget just a second, capital budget that we're going to show in just a second. As far as capital, for total fiscal year 25 capital expenditures is budgeted at $8.6 million and the grants that we have teed up are going to fund $3.1 million of that. So from operations, we're going to fund $5.4 million. So we think that's very achievable. You can see that the highlighted item there is the OR and the air handling unit upgrade, for $1.3 million."

Whitaker said: Leonard said about $3.2 million in the capital budget. This is grant funded. This one is an EDA federal grant of $1.3 million for new telemetry upgrade. The telephone project you see is $450,000 and that's grant funded. "We're currently underway now. In this fiscal year, it's just because we've started this fiscal year and funds haven't been the last fiscal year. So there's a continuous budget. Nurse call system is another grant-funded project, along with telemetry. And so all of those items, I think there's one more here. It's a process of replacing equipment and doing infrastructure upgrades. Priscilla (Lucero of SWNMCOG) was talking about getting a grant from our special appropriation from Senator Heinrich regarding replacing an MRI. I hear that that grant is going through government in DC called HRSA. I've made the application for it, and the notices of award don't come out until September, so we wait until September to get that Notice of Award, and then we can start the process of applying for actual funds."

He said capital budget is built out over four or five years. "So over the last two fiscal years, when we add both of them, it's a little over $6 million and a little bit more this fiscal year before the last one. And so this is the first year where we do see a big increase, just because we have, especially the ones that are grant funded, and quite a few larger grant funded projects, but we can still continue to still apply for grants. At the last state legislative session we got $600,000. I just found out from Senator Heinrich's office about another congressional direct spending grant that I applied for, for plant and utility system upgrades. It was $275,000 and it's made it through the first two hurdles within the congressional appropriations committees. And so there's a high likelihood we'll have another one going on. I don't know if, next fiscal year, if we'll have $8.6 million, but we hope so.

"We know the direction we want to go with the potential future,
either new facilities or significant renovation here, depending on what a study demonstrates."

Manis noted that there is a lot of discussion on how many days of cash a hospital should have. 180 days sounds good, because it's six months of operating expenses, but there is no standard number.

Manis said: "Here, you just sort of have been saying that we're reinvesting much more capital wise than we have historically. And that's funding from operations here, right? We're funding $5.5 million or so out of operations. And that's money that we weren't funding before, right? It could be going into cash as well. So think of that sort of the reverse. We are funding more capital equipment needs going forward. And then Robert also mentioned Leonard did about $2 million or so additional going towards salaries. Think about if we, I'm pulling a Scott number out of the sky right here, if we, if this board decides, at some point in the next couple of years, to make a significant reinvestment here, build a new facility, that facility is going to be expensive, with financing that, if today's interest rates, even if you get it through the New Mexico Finance Authority, still 3% rate. That financing payment is going to be $350,000 to $500,000 a year, likely. I mean, you're talking $4 to $6 plus million that's currently showing as revenue that's dropping through that would get redirected to form a financing for a new facility. I'm way out in front of where we might be one day if we do go there, but kind of what we're doing now is not too much, I guess is kind of what I'm saying. If we want to put a reality check on where you might be looking. So the days of cash on hand, 180 say it's half the year. Is that cash on hand based on half of the total expenses here for the year, $96 million. So that's about $45 to $48 million.

Vega said: "I do want to say that one thing that we did discuss in the committee meeting on Monday was that the hospital now is in a position where we can kind of catch up with pending items that we've had, you know, for the last few years. And you know, we can buy equipment, what we just did."

Discussion continued until a motion was made to accept the
capital and operating budget for fiscal year 25 It was approved.

The first update report came from Chief Nursing Officer Ron Green, who also noted the completion of the Women and Newborn department area. "It was nice to see Dr. Fox and Dr. Montoya (a retired obstetrician) there for the ribbon cutting. We will be transitioning from the former area to the new area over the next few days. If we have a birth during the transition, the mother and baby will be on mobile monitors."

McIntire noted the new area had been under discussion and planning for years, and she was happy to see it finally come to completion. "I would like to see you bring back the nurses care committee. It was made up of nurses from all departments. It develops accountability and excellence in nursing."

Green noted they are working on building a team to address the issue. "Their main responsibility will be to assess clinical practices, identify areas for improvement, and just ensure adherence to standards as fair and ethical guidelines. Our goal is to promote high quality patient care, support professional development, and just maintain a culture of accountability and excellence in nursing. So we're excited to get this going. We hope to have this committee up in September."

Binkley gave the monthly CFO report. "The volume trend was kind of slow in June, and it transferred into a bottom line loss of $50,000, but while we're on this slide here, you can see that surgical volume is the only volume that went up, everything else went down, in some some cases significantly. Looking at discharge, we had 101 discharges or 19% or 28 percent down to prior year, We did well with 71 surgical cases. That's up to budget by 22 surgeries, or 9%. Outpatient visits were flat.That's the lowest in the trend in the six month trend for June, And you can see the 1281 visits in the ER represents an average of 42.7 visits per calendar day. Our typical run rate year-to-date is 45.7 so we're off about three visits a day in June."

Vega asked about the drop in visits.

Green replied that June, July are generally, historically, "where we have seen some low census, except for last week."

Chief of Staff Dr. Colicia Meyerowitz chimed in with: "It was just crazy."

Hawkins asked about the drop in discharges.

"One of the things that could happen is you looked at discharges from the hospital versus outpatient, because clearly in the past, the length tended to be longer, so we had a larger census," Fox replied. "Now, with improved testing capabilities, improved medication treatment, a lot more care is done as an outpatient, a lot more diagnostic work is done as an outpatient. So some of this could reflect that it's simply more medical care being given in an outpatient setting, and it's more short term and serious care that's given over a long period of time. We'll see more of that, whether that certainly is something we need to think about in terms of what are the needs for future hospital? How much inpatient facility do you need versus outpatient facility? How much flex capability, if you will, do you have to be able to respond to those decreases in the summer, or if a week is busy, you have to be able to take care so I think that's different than the situation in the old days."

Meyerowitz said the change to critical access makes physicians more careful in how long they require patients to stay in the hospital. "The average length of stay here now is three days."

Binkley continued: "Looking at the bottom of the page here, we had a net loss of $550,000 for June on a budget of $757,000 for so we're down $1.3 million to our budget. It's important to drill down to the numbers there and normalize it. And it makes a little more sense, but the reason for the $550,000 net loss, as I explained, volume in almost all areas was off in June, and we had some increase in our other operating expenses. Let's go up to the total operating revenue line, we had $6.5 million in June of total operating revenue on a budget of $7 million. So we were down $500,000.

"But looking at the overall budget, we had $92.4 million revenue on a budget of $84 million. So we're up $8.4 million to the prior year. This year, we ended up at $8.6 million so in FY24 we were $6.8 million higher than FY23 so good growth there. The operating expenses of $85.9 million in June compared to a budget of $79 million. So we're up $6.9 million on our expenses. In the prior year, we ended up at $3.5 million. So compared to prior year, we're stronger again, translated to our bottom line performance. So even with the lower volume in June, it didn't seem to affect the revenue that much. Just a comment: If you look at it, our revenue is clearly up. We've talked about some of the reasons for that. In terms of expenses, several categories came down compared to last year. It was really, as you pointed out, supplies went up, mostly Cancer Center expenses. Salaries and benefits are also up."
Binkley said: "You're going to see some increase to cost. Cancer Center is about 65% of our business and Medicare business, and another 10% is Medicaid business. So there's about 75%."

"When we do the cost report, we'll drill down and see how much bad debt is due to patients in the cancer center not paying their insurance. But that's one of the big projects that I'll tackle, working on the Medicare cost report and providing that information to DC. The cost report comes here for your approval."

In the key measures of liquidity, the report lists net AR (account receivable) days, cash on hand, current ratio, average payment period. "We're doing well in all those metrics. So we're doing well in AR current ratio and average payment period . We're also doing well in AP (accounts payable), with very little over 60 days old."

Whitaker gave the CEO report. "On the orthopedic clinic, we are right on the threshold of finishing that up. There weren't major renovations in space. We didn't move walls, we didn't have to go and change bathrooms and bathroom sizes, but if it's something that we are looking at in terms of having a discussion on that, we will."

"We've started work in other areas, and we've been to the ER and come through the entrance. We're kind of cleaning that area up. And so we're also going to be working on exterior signage, signs on 32nd street. We'll have the PET scanner back up and going. We haven't had that service for about three months. The mobile unit used to come in for a couple days and then go out and come in, but it's going to be parked here. Always a better schedule for us."

Meyerowitz asked: Are they changing the schedule for that then, since it will be here, or still the scheduling, because as medical staff, we're not aware of that even coming."

Whitake said they've talked about the PET scanner and the signing of the contract, but in regards to the schedule, "I don't know how they're gonna schedule if it's every day or if it's certain days of the week."

"The wireless project is complete. We're working on the phone project now," he concluded.

The board went into executive session. After they returned out of closed session, they approved the Medical Staff Committee provider credentialing report and approved the policy renewal for the Peer Review Committee Charter.

The meeting adjourned.