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Small Maine hospital shares experiences in making tough financial decisions

When it comes to making difficult financial decisions at hospitals, it’s crucial to maintain transparent communications with employees and the community. How one small hospital weathered a financial crisis was the focus of a presentation Oct. 26 at a hospital best practices workshop presented by the Maine chapter of the Healthcare Financial Management Association in Auburn, Maine.

[See also: Maine budget proposal to pay hospitals for old Medicaid bills]

Wendy Jones, controller at Blue Hill Hospital in Blue Hill, Maine, shared the successes of the hospital’s process of making important decisions during a difficult financial environment.

[See also: Maine budget proposal to pay hospitals for old Medicaid bills]

By the end of 2008, Blue Hill Hospital, a small, 25-bed critical access hospital, was “coming up on a year of huge operating losses with a 2009 fiscal year budget approved with a nearly $1 million deficit,” Jones said.

Historically, Blue Hill Hospital had always received a great deal of endorsement funds, however, due to the financial crisis in 2008, those endorsements had decreased substantially leading to the beginning of the hospital’s financial troubles.

[See also: Maine hospital to cut 76 jobs]

“Blue Hill’s mission had never focused on finance. It was the culture of Blue Hill itself,” said Jones. “Until this financial perfect storm happened, the executive management couldn’t grasp the possible crisis coming, and when it did, the hospital’s governance committed to change but didn’t know what to do.”

Jones said it was at this time that the executive management of the hospital had to start making difficult decisions, which included closing the hospital’s well-known labor and delivery program.

[See also: Maine hospital to cut 76 jobs]

In addition, Blue Hill Hospital utilized support from their hospital affiliate, Eastern Maine Healthcare Systems (EMHS), and began outsourcing areas of the organization to EMHS, including various fiscal services and accounting.

All of these decisions, said Jones, were made in conjunction with effective communication among staff and the community as a whole.

“Physicians were worried about how they would achieve their missions and continue to take care of the community, while the community was wondering, ‘will we still have a hospital to go to?’” she said. “It’s important to understand the diversity of your affected groups and their point of views that they are coming from. Putting as much information out there as early as possible – that tends to work well.”

During this financially challenging time, Blue Hill Hospital discovered a number of tactics for making difficult financial decisions that really worked well for them, Jones said. The successful tactics included management training to ensure managers were given the tools they needed; establishing attainable goals with time parameters; and always maintaining alignment with governance, which, in some cases, required new hospital committees to be formed. Jones added that as far as alignment with governance goes, it’s important to know “when to stop fixing the leak and realize something cannot be fixed.”

Jones also discussed the hospital’s utilization of a voluntary leave program for employees.

“In the process of aligning our budget, the hospital came up with a voluntary leave incentive program and six employees took the opportunity. They voluntarily resigned, and we didn’t have to do layoffs,” she said.

Despite the fact that Blue Hill Hospital was forced to make a lot of difficult decisions in order to get their budget back on track, Jones said the hospital looked at ways in which their decisions could serve as positive opportunities for them.

“It was an opportunity for us to replace low performers and begin a reutilization of space. Our labor and delivery area become an oncology unit,” she said. “Executive management was able to focus on new services and ensure their mission is sustainable into the future.”

 

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