Martha’s Vineyard Hospital ends year in black, looks ahead warily

Ralph Stewart

One year ago, the Martha’s Vineyard Hospital staff made the transition from an aging one-story building to a new, modern three-story brick hospital built at a cost of more than $48 million raised entirely through donations.

Hospital officials readily admit there were some difficult moments in the ensuing summer months. Most notably, to the emergency department where procedures that once worked in the confines of the old emergency room (ER) were not transferable to the larger space.

One year later, the hospital has changed ER procedures, added new personnel and equipment and finished the fiscal year on March 31 in the black with a modest profit of $155,620 on operations.

The margin was slimmer for Windemere, the hospital-owned nursing home, which ended its fiscal year on Dec. 31, 2010 with an $11,112 profit.

Looking back, hospital CEO and president Tim Walsh speaks with a sense of accomplishment. Looking ahead, he is concerned about what the outcome will be from the shifting political discussion on health care costs and how it will affect the insurance reimbursement calculations the hospital relies on to stay healthy.

Rough start

“We had a rough start in the ER,” Mr. Walsh said in a recent telephone conversation. “We did not open until June 22 and once the summer season began it was hard to make adjustments. You just can’t make it happen in the short run.”

Mr. Walsh said the biggest adjustment made this year was to the emergency department. The hospital added physician assistants and established a protocol for when an additional doctor is called to provide backup.

“All of these adjustments may sound easy, but it can take some time to make it work,” he said. “Dr. Zack (Jeffrey Zack, ER director) is the guy who put it all together.”

Mr. Walsh said the hospital also added new staff. They include primary care physician Prit Gill, board-certified in family and geriatric medicine.

The hospital has also continued its integration with the Partners HealthCare group and the hospital affiliate Massachusetts General Hospital. “We’ve integrated the hospital with MGH medical services and technology even more,” Mr. Walsh said.

This spring a new General Electric Optima wide-bore magnetic resonance imaging (MRI) machine that hospital leaders say will provide expanded diagnostic capabilities, improved patient comfort, and reduced fees, was installed in the new building. The machine became operational this month and is linked to MGH.

The hospital also signed an agreement under which the MGH Department of Anesthesia, Critical Care and Pain Medicine now provides anesthesia coverage for its Island affiliate. Major changes include the addition of certified registered nurse anesthetists who will be available 24/7 year-round to assist MGH anesthesiologists, and the adoption of MGH electronic scheduling and anesthesia record-keeping systems.

Under the old service model, the hospital relied on one doctor who would be in the hospital when needed, or on call if there were no scheduled procedures that day that required anesthesia services. MGH, with its pool of resources, is responsible for scheduling coverage, a problem for any small hospital with limited resources.

The hospital’s two staff anesthesiologists Drs. Stephen London and Stacie Nobel-Shriver had the opportunity to apply to become a part of the DACCPM staff that will rotate through the hospital.

Hospital board chairman Tim Sweet of West Tisbury and vice chairman Edward Miller of Chilmark led a campaign to spread Island artwork throughout the new building. Paintings, photos, and sculptures by recognized artists now dress up the corridors and rooms of the new building.

Overall, Mr. Walsh said he is very happy with the new facility. “I am real happy with the building,” he said. “I think it looks as good today as it did the day we opened it. I am also happy with the way it is wearing.”

Shades of black

The hospital ended its year with a gain of $155,620 on total revenue of $55,470,141 and expenses of $55,314,521. In the previous 2010 fiscal year (FY) the hospital ended with a gain of $66,260.

Net patient service revenue in FY 11 that ended on March 31 was $53,547,039 compared to $48,410,196 in fiscal year 2010. Expenses totaled $55,314,521 in fiscal year 2011 compared to $50,382,819 in 2010. The FY 11 figure included $26,469,748 in salaries and wages.

“We did okay,” Mr. Walsh said. “We ended up with an operating gain of $155,000. We had to struggle a little to do that.”

Gifts and investment income pushed the final total to $2,388,359. Although the year-end financial statement reflects a total FY 11 gain of $41,509, that number is inflated because the statement includes $39,120,812 — the current value of the new building.

The hospital also provided $6,556,311 in uncompensated care, a figure about evenly split between charity and bad debt.

Future concerns

The fact that Martha’s Vineyard Hospital has been able to keep its financial head above water has much to do with the generosity of seasonal and year-round residents and its designation as a critical care access facility, which provides for a higher rate of insurance reimbursement

“I am worried about the future,” Mr. Walsh told The Times. “There is a great deal of emphasis on costs and running a hospital on an Island with a small population is expensive for the services we offer. I do not know where we’re going to fit going forward.”

For example, he said the hospital must provide surgical capability to be licensed as an ER. That also requires anesthesiologists and nurses. That is an expensive proposition on an Island where there is not a great deal of demand for surgical services compared to a mainland hospital.

The real challenge he said is to run 24 hours a day and find a way to absorb the standby costs of a rural model that is by its nature inefficient. “These standalone imaging centers, for example, they can just close at 5 pm and the staff goes home,” he said. “Here, I might not use my CAT scan for three nights in a row, but it is there and staffed so when it is needed it is available.”

Martha’s Vineyard Hospital’s critical care designation and the higher reimbursements it means is a vital part of the equation. Whether that will survive is unknown.

Currently, he said many of the Island’s municipal workers have Blue Cross and Blue Shield. There is a state push to have those employees switch to the state’s own Group Insurance Commission (GIC) plan. “If they do that we are going to be in serious trouble,” he said. “The reimbursement rate is much lower, not because it is less cost, but because that is what they pay.”

For now, Mr. Walsh said he will continue to make the case to regulators why there needs to be a system that takes rural factors into account. At some point there may have to be choices to be made about what models the hospital can provide and what it would cost, he said.

“In a way, it is a microcosm of what is happening across the country,” he said. “You can’t say it is going to cost us a lot less money and think you are going to get the same services. It can’t happen.”