February 26th CEO Update

The two words ‘information’ and ‘communication’ are often used interchangeably, but they signify quite different things.  Information is giving out; communication is getting through. – Sydney J. Harris

 

February 26, 2021

CEO COMMUNICATION:

For the first time in a long-time, I am really optimistic about the direction the COVID statistics are trending.  We are seeing steady declines in positivity rates and overall cases.  The rate per 100,000 is at its lowest point since early October.  As a result, we are beginning to make incremental moves to return operations back to a more normal state.  We are relaxing the visitor’s policy a bit and as a first step have implemented the policy below that was circulated earlier this week.

The above positive trend and the increasing number of persons in the community being vaccinated provide us with a comfort level that we can do this safely.  Obviously, we are not at the point that the physical precautions previously recommending are going away (Masks, Handwashing and Social Distancing) but as I said it’s a step in the right direction.

We will continue to evaluate and adjust as we can.  We as much as you want to see a return to normal as soon as possible and will do so when it can be done safely.

Speaking of vaccinations, I sent out an email yesterday urging staff that has not received the vaccine at this point to please consider doing so.  We feel confident that with the experience to-date, that the vaccine is safe.  Having a large population vaccinated is the fastest way out of this crisis and we would really like to see this organization being the example for the community.  We are a little over 70% of our staff right now and really want to see this grow.  As you may recall it is expected that the community will need vaccination coverage in excess of 75% to truly achieve herd immunity.  If you look at the percentage of persons receiving the vaccine in the current approved age groups (65 +), it would appear we are falling well short of that number.

This week we had the opportunity to assist the Ute Mountain Tribe in their quest to return to normal.  They are working to reopen the Ute Mountain Casino next week and we assisted with the testing of employees this week to help them meet that goal.  We anticipate this to be an on-going arrangement as we become their preferred provider for these testing services.  A big thank you to everyone that worked to get this arrangement in place and participated in that event and made it very successful.

They have a very aggressive vaccination program going on also and have set the goal of getting 100% of the Ute Mountain Tribe vaccinated.  They are handling this process internally.

FINANCIALS:

We started off the year very strong with above budget results for January.  We are starting to see volumes somewhat normalize in most areas, but continue to see a significant reduction in Emergency Department visits.  We are not totally sure of the reason for this at this point, but does seem to be a continued fallout of COVID.

Rick’s January narrative follows:

Southwest Health System

Financial Narrative

For the Month Ended January 31, 2021

BALANCE SHEET:

We had strong Patient Cash Collections of over $4.6M for January 2021.    In addition, we received $406K for our 2020 interim cost report.  Operating Cash decreased by $598K from December 2020. Our Combined investments reflected a market loss of $9k.  Our Gross AR increased by $1.3M.  Our Net AR increased by $691K.  Other Non-Patient AR decreased by $12k.

Inventory decreased by $1k.  Prepaid expenses decreased by $26k.  Long Term investments showed a showed an increase of $1k.

Fixed Assets decreased by $366K primarily as a result of depreciation expense ($391K) for January 2021.

LIABILITIES:

Accounts Payable decreased by $504K.  Payroll liabilities increased by $226k.  Other current liabilities increased by $183k primarily due to 2020 Interim cost report monies received and accrued health claims, bonuses and other miscellaneous liability transactions.  Based on our changes in our 2021 Health Plan, we pay the first $200k before reinsurance is activated.

CURRENT EARNINGS:

Revenue over Expense for January was ($45k).  EBIDA for January was $484k.

INCOME STATEMENT:

Total Gross Patient Revenue was above budget by $446K.  Net patient revenue was above budget by $314K.  IP Gross Revenues were above budget by $307K.  Hospital OP Gross Revenue were above budget by $33K.  Clinic Revenues were $107K above budget.

Total Net revenue was $285K above budget.

Provider salaries were above budget by $92K, and staff salaries were above budget by $43K.  When reviewing January 2020, we realized that we had over accrued roughly $240K in salaries for December 2019 which reversed in January 2020.  Provider Salaries budget for January 2021 was a miss on my part.  We are implementing a more robust productivity monitoring system which will be operational in early March 2021.  Also, running our vaccine clinic was the primary cause of our non-provider salary miss.

Contract Labor totaled $256K which includes Tony, Karen L, Rick, most of our Hospitalist group.  Benefits were below budget by $113k.  Reinsurance is active at $200k per plan participant and we have migrated our self-insurance plan to Meritain.  We have reduced our co-pays for employees on our health plan when they utilize Montezuma county providers.

Medical Specialist fees were $68k below budget and are based on providers serving on committees related to overall Hospital Improvement.

Purchased Services were above budget by 47k, primarily as a result of Quest invoices due to COVID testing.  We anticipate with our BD Max machine supplies flowing on a more regular basis, we are planning to perform more tests inhouse.

Supplies were above budget by $140k due to joint replacements (8 implants $65k), Retail Rx prescriptions of 4,300 and additional PPE purchases ($55K).  All other supply related expenses were within Budget ranges.

Rents and Leases and Utilities were on par with Budget.

Interest Expense was ($138k) and Depreciation ($391k) are calculated by the interest amortization schedule and AHA guidelines for depreciation.

Donations ($148k) is the result of the MCHD sales tax received in January 2021.

As I am sure you know we are approaching the one-year anniversary of what became a year of constant turmoil.  But as I said earlier, I am optimistic we are seeing the light at the end of the tunnel.  I am very much looking forward to Spring with warmer weather and the opportunity to venture out more than we have done in the last year.  We are by no means out of the woods, but this just feels like a more sustainable trend and as long as we don’t lose sight of the end goal, we will get there.  We have to keep our guard up for awhile longer and maintain recommended precautions until guidance changes. As more data is gathered and more is learned about the effectiveness of the vaccine, we do expect that guidance will be adjusted.  Until then we will continue to be the example for the community and set the standard for handling this crisis as we have been doing up to now. 

The team at SHS continues impress me every day.  The willingness to go the extra mile is something we see all the time.  It’s never a question of if we help the community it is how do we get it done.  Thanks for hanging in there with us during this time.  You are amazing group and thank you for all you have done. I believe sometime soon; we will be able to come together and celebrate all that has been accomplished through this time and I for one am really looking forward to that day.

Thanks,

 

Tony