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Interim CEO: 'Great potential' at UCMH

By Kayla Carter
Staff Writer
[email protected]
Unicoi County Memorial Hospital Interim CEO and Senior Advisor Jete Edmisson of Spectrum Health Partners called the hospital a “gem” last week and assured his company would provide the necessary information to help individuals on the UCMH Board of Control make crucial decisions regarding the hospital’s future.
Spectrum’s plans
“What we’re charged with doing is, over the next 6-8 weeks, reviewing the hospital from top to bottom,” said Spectrum Senior Advisor Tim Menton during a conference call with Edmisson on Friday.
“The main start of this is looking at the hospital’s position in the market and what its tentative risks and strengths are. We’ll be looking at the revenue side of the hospital operations primarily around billing and collections.”
Edmisson said he is not alone in gathering the data that could provide a solution to financial woes at UCMH.
“I’m gathering data all this week,” he said on Friday. “There’s not only myself and [Menton], but there are other members of our group that are getting data and assessing it. They are gaining access to reports.”
Menton said the next step would be to analyze the hospital’s expenses such as staffing and supplies. “We’ll also spend a fair amount of time looking at expense lines at that hospital,” he said. “We’ll look at staffing, organizational structure and purchasing supplies in terms of their contracts.”
He said other contracts, such as ones with physicians, will be analyzed as well.
The final step, Menton said, is to make recommendations to the board for improvement. “Again, as I mentioned, it’s going to take 6-8 weeks for us to get to at least a draft report that we would be comfortable presenting to the board.”
Edmisson said that they will have compiled a preliminary report in about two weeks. “It’s a quality check that you would want on anything you’re looking at,” he said. “We want to give them a concise picture of what we see in the first couple of weeks.”
Events leading to Spectrum’s role
The Spectrum recommendations come out of demands made by the town of Erwin, who requested the board consider accepting assistance in improving the finances of the hospital.
Toni Buchanan, the hospital’s chief financial officer, said the board has been reporting a loss of revenue since two years ago.
Menton said that he was made aware of a $800,000 loan given to the hospital by the town of Erwin that came with stipulations to hire an outside entity to review UCMH’s operations.
At the July 9 board of control meeting, Erwin City Recorder Randy Trivette said the hospital’s total debt had risen to $1.4 million from $1.2 million before the loan.
Menton said he was in contact with Trivette during most of the board’s consideration on which company to bring into the equation.
The recent implementation of Edmisson as interim CEO at UCMH was an extra step taken by the board to gain more insight from an outside perspective.
Before Edmisson was voted in by a 5-2 vote during a called meeting on July 9, the board also approved Spectrum to conduct a survey, which analyzes the hospital’s finances as well as daily productivity.
The company was asked to inspect the overall functions of the hospital in order to suggest solutions to financial burdens, which continue to create debt for the county’s independent health services provider.
“Over the past several weeks, I’ve been in touch with Randy Trivette, who I think is really the one who has been most involved in screening through the couple of firms that had expressed an interest or whose names came to the surface,” Edmisson said. “The board selected our firm, which happened [July 9]. They also voted for our firm to go ahead with an operational assessment.”
The board’s decision to hire Spectrum and Edmisson followed the acceptance of Jim Pate’s resignation as CEO. The events that led to Pate’s administrative leave and resignation are unclear.
It was previously stated that health issues were the cause of the administrative leave, but board member Russell Brackins alluded to other reasons behind the leave during the July 9 meeting when Pate’s resignation was approved unanimously.
A copy of Pate’s resignation letter was provided by hospital board member and County Commission Chairperson Sue Jean Wilson prior to a special-called session of the County Commission. Wilson said after consulting County Attorney Doug Shults, she found the hospital board to be a governing body and the letter public record.
Although the letter states no reason for his resignation, Pate outlined his severance request and commended the hospital staff. “I wish the hospital success in the future,” Pate wrote in his letter. “It has been a pleasure working for the hospital and the citizens of Unicoi County. It has especially been fulfilling to work with the employees of the hospital. I feel that the hospital has some of the best employees anywhere.”
Pate’s request to have his leave extended was rejected by the board, which contacted him during a recess to revise his resignation from Aug. 22 to July 9, which board Chairman Todd Love reported Pate accepted. Pate’s severance was calculated as $29,114.66 for all benefits to be paid in full except for health benefits.
Menton said that the board requested Spectrum’s services as well as the implementation of new leadership.
“Obviously the reason why [Edmisson] is there, the board made the decision with the prior CEO Jim Pate to put him on administrative leave,” Menton said. “We were not involved in that. It just happened on its own as I understand it, but they did ask us if we had the capability of providing some interim CEO leadership. We said we could and they made that decision on Monday night as well. [Edmisson] was in town on Monday and there full time at the hospital on Tuesday morning.”
About Spectrum’s team
Menton said that he and Edmisson have worked outside of Spectrum as financial executives for various hospitals.
Spectrum, based in Franklin, Tenn., specializes in consulting with hospitals in various ways, said Menton. “We do a lot of merger and acquisition,” he said. “We work with hospitals and health systems. We actually do some restructuring. There’s a hospital in Arkansas that went into bankruptcy and we’re helping to restructure that. We may even have a buyer for them.”
Edmisson said he was recently helping another hospital discover areas where they were paying high penalties on money borrowed for investments.
“We consolidated all of our payments that were due to vendors, which were charging us aggressive interest,” he said. “We were able to get a loan to be able to pay a lower interest rate. It also kept the local bank happy and that meant more money back to the organization.”
Paying high interest on investment loans is the reason most hospitals find themselves in debt, Edmisson said.
“It’s not productive money,” he said. “When you’re paying a vendor interest like that, it’s not productive. It doesn’t go to the good of patient care. What we try to do is assess the cost of the money and see which is the best way to do it. Borrowing might be a short term option to minimize overhead expenses.”
The biggest goal, Menton said, is helping the board find a way to continue to provide a hospital to the Unicoi County community.
“That is ultimately what we want to see happen,” Menton said. “The economic impact of the hospital is also huge. If you didn’t have the hospital, people are going to be a half hour or so away from an emergency room. That’s not what the members of the board want to see – people going outside of Unicoi County for hospital services.”
Community hospitals
on national level
The county’s hospital is not alone in the struggle to stay out of debt, said Menton.
“We have found that hospitals around the country of this size, kind of smaller community hospitals, are having some struggles,” he said. “So it’s not just Unicoi County Memorial Hospital. It’s going on around the country and in the state of Tennessee. Part of that is because of the reimbursement changes that are going on.”
Menton said although the health care reform law recently upheld by the Supreme Court hasn’t had much of an impact yet, he suspects hospitals are gearing up for even more change.
He also said on a state level TennCare has constantly made changes in the way reimbursements are handled.
“The health care law really hasn’t been fully implemented,” he said. “Really the full effect of that hasn’t gone into effect yet. That’s not to say that the health care market isn’t moving and preparing for that. I think that’s some of what we see, but programs like TennCare just have consistently changed their reimbursement. Most of that means lower reimbursement to the hospital so you have to find ways to serve that population in a way that is effective and safe. It has to be quality driven with less dollars.”
Menton pointed out a national paradox between keeping money flowing through the health care industry and keeping people well enough to stay out of the hospital.
“The pressure’s on the cost that people are paying for health care and trying to keep people out of the hospital,” he said.
“The hospital [in general] has lost some of its volume over the last several years. Certainly when you have capacity that’s not being utilized, there’s fixed costs that come into play there.”
Spectrum’s mission
Emphasis is placed greatly on finding ways to remain steadfast against the economic hurdles posed by governmental changes in health care and the ever increasing need to upgrade hospital facilities and programs, said Menton about his company’s goals at UCMH.
“Obviously, access to capital either through borrowing or investment for programs, for the building, for equipment and technology in electronic health records; all of those things are another huge pressure on smaller hospitals that don’t have the borrowing capacity or the ability to leverage with lenders to get the best wage and gain the access [to capital].”
Menton said the main issue his company is facing is finding ways to access capital for UCMH. “Sometimes a community hospital has done well over the years and they have set aside a fair amount of funds on their own so they can invest that capital, that money, without having to borrow,” he said. Another model, Menton said, is a for-profit approach where shareholders put money into the company that could be used for capital needs.
“Another source is borrowing, there are parameters for which you can do that,” he said. “You don’t want to overextend yourself, but there’s a sweet spot that you want to achieve so that you can leverage that. Certainly borrowing means you have to pay it back at some point and in some way. The purpose of that is to help expand services so that the income and revenue that is derived from that capital investment is available to pay off the debt, if you were to go that route.”
Menton confirmed there are financial limitations at UCMH and how important capital is in overcoming them.
“The hospital (UCMH), as has been published, is very strapped from a cash standpoint,” Menton said. “It does not have a lot of money to do renovations, to do expansions, to do a lot of anything. What I also understand is that there has been a freeze on any raises for at least five years at the hospital. I commend them for hanging in there, but typically you want to reward your employees for a good job and do some various adjustments over time, certainly within five years they should.”
With a little research, Menton said, he understands that UCMH is “excellent” in areas like infection rates, quality measures and patient satisfaction.
“The staff is engaged and is looking for a vision of what the future offers,” he said. “They’ve responded since we’ve been there. I think they are dedicated and committed. At the end of the day, it’s the people – physicians, caregivers and support staff – that make a difference in the way the hospital will survive or not.”
Edmisson said he expects his own support staff to be close by during his month-long tenure at UCMH.
“Next week there’s going to be two other gentlemen here that have 25-30 years of experience as well,” Edmisson said. “We also will be bringing in other people as we see a process that needs to be focused on. It won’t be just on my shoulders.”
Menton is confident in Spectrum’s ability to provide guidance to UCMH.
“This isn’t going to be fixed in 30 days,” Menton said. “We’re not going to see a whole new hospital or anything like that in 30 days. We will have a road map of some things that can be done and the board, the hospital and community will all play a role in deciding how to utilize it and when to implement it. There is a sense of urgency because the hospital has been falling into a little deeper financial hole.”
The board’s expertise is limited in the area of health services, Menton said, but he also has faith that they will be able to make the best decisions concerning the hospital’s future based on his company’s findings.
“Part of what we understand, the board is very capable but generally they are not health care experts,” Menton said. “So this is really a request for assistance from a firm that has the level of expertise they don’t possess. They are businessmen and retired individuals who are certainly very focused on the community … but they want another set of eyes to help guide them into the future.”
Edmisson said he was impressed with the “foundation and quality” of the hospital.
“We feel just feel like there is a great potential of opportunity here,” he said. “We just need to make sure we have the right kinds of things for the community. This is the first day of the next 50 years.”
Edmisson said he invites the community to stop by the office with any questions or suggestions. To contact the hospital, call 743-1203.