The Heart of the Rockies Regional Medical Center Board March 26, approved establishing its own in-house pharmacy for patients utilizing services at the expanded facility as well as benefiting hospital employees. Vice president of fiscal services Lesley Fagerberg, outlined the development idea and the feasibility for an in-house pharmacy.
As the new hospital outpatient pavilion was being planned, she said, “we envisioned that a retail pharmacy would be a great attribute to all of our patients, visitors, who come to this campus for any reason … it seemed to be the right fit for a possible outpatient pharmacy space,” she added.
Photo by Lee Smith.
After months of researching possibilities and options for an existing retail pharmacy partner, nothing materialized that seem to be a recipe for success, she said. So realizing there was “internal passion, expertise and experience” in the retail pharmacy area with hospital pharmacists, it was decided a service line could be grown in-house.
Asked how the pharmacy would compete with purchasing against larger providers, Fagerberg said the hospital has primary vendors, purchasing contracts that enable getting better pricing, contracts with other existing pharmacies and other advantages, allowing the in-house pharmacy to be competitive for patients as well as offer cost incentives for hospital employees.
The board voted unanimously for the establishment of the pharmacy, with a timeline depending on licensing requirements. Initial cost estimates include a start-up and initial stock costs totaling about $135,000.
Water pressure problem resolved, financial audit complete
The board also approved a large construction change order to correct a water pressure problem. The problem arose after a new sterilizer was installed as a redundant system to sterilize instruments for surgeries, a water pressure problem affecting hospital systems was revealed.
The hospital’s report said that a three-inch water main provided about half the gallon-per-minute rate deemed necessary, causing pressure loss to patient critical facilities and equipment from showers to dialysis machines and sterilizers.
To resolve the issue, an emergency capital request was approved last fall for a six-inch line, but engineering fees and construction costs exceeded the original estimates (a not-to-exceed $400,000, including the tap fee). An additional amount of nearly $200,000 including piping and pumps, was approved, bringing the cost to resolve the water pressure issue to $600,000.
In other action, the board also reviewed an independent auditor’s report on medical center operations provided by BKD LLP, CPA.
A management summary of the financial report noted the continued success of the facility, noting the addition of several physicians to existing services, including rural health, internal medicine and neurology clinics, the opening of the allergy and audiology clinics, with the hiring of two additional providers.
The dialysis clinic, opened in 2017, has seen continued patient volume growth and the pursuit of certification for additional services.
The management report also cited inpatient admissions were down 1 percent while patient days (length of stay) increased 4 percent. Outpatient services saw increases physician clinics (21 percent), rehab services (14 percent), chemotherapy and infusion services (11 percent), laboratory services (2 percent), decreases in surgery (3 percent) and the emergency department (2 percent).
The executive summary reviews three statements of financial position: net position; revenues, expenses and net position changes and cash flows. Some of the management report highlights:
- Cash and investment increased by $8.7 million in 2018 and $8.3 million in 2017.
- Its net position (definition) increased by $11.9 million compared with $7.5 million in 2017.
- Operating income increased by $3.9 million (59 percent) compared with $448,192 or 7 percent in 2017.
- Total operating revenues increased by 17 percent in 2018 to $11.4 million. In 2017 operating revenues increased 10 percent to $5.9 million.
- Total operating expenses increased 13 percent in 2018 to $7.5 million compared with an increase of 10 percent, to $5.4 million in 2017.
Costs for charity care for the center in 2018 are $313,000 and $148,000 in 2017. It was noted that applications for charitable assistance have been significantly reduced by the Medicaid expansion under the Affordable Care Act (ACA).
The Salida Hospital Foundation reported cash and investments increased by $23,275 or 2 percent in 2018 compared with an increase of $43,713 or 5 percent in 2017.
The foundation received grants from Colorado Grand Inc., and the Division of Local Affairs (DOLA) of $5,000 for 2018 and $1,682 in 2017 to partially fund emergency preparedness activities and purchase of a new CT scanner.
The foundation collected unrestricted donations of $29,582 in 2018 versus $62,244 in 2017. Donations for the hospital on-site trail expansion for its wellness program and other restricted contributions transferred to the Medical Center totaled $17,954 in 2018 and $123,442 in 2017.
The management summary also noted the continuing impact of healthcare legislation at the national and state levels as contributing factors to its financial risk. These include repeal or changes to the Patient Protection and Affordable Care Act (PPACA), implementation of a single payer system in Colorado as well as reductions in reimbursement to fund a statewide reinsurance program to lower individual market premiums, ongoing sequestered federal payment reductions, physician and staff recruitment and retention, the high cost of housing and below average income trends within the center’s service area.
Debt for the medical center in terms of notes and bonds for 2018 was at $31.6 million compared with $22.5 million for 2017, reflecting financing of $10 million in October of 2018 to replenish cash reserves being spent on the major expansion of its outpatient pavilion, laboratory and parking that began in mid-2017.
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