Becker's Hospital Review

14 CFO / FINANCE Separately owned hospitals in Missouri capital 'not sustainable,' St. Mary's president says By Leo Vartorella S t. Louis-based SSM Health is in talks to sell its Jefferson City, Mo.-based St. Mary's Hospital to a local competitor aer deciding that having two separately owned hospitals in town is not sustainable, according to the News Tribune. Philip Gustafson, interim president of St. Mary's, said his system is looking to sell the hospital to Columbia, Mo.-based MU Health Care, which owns Capital Region Medical Center in Jefferson City, because his facil- ity is not able to fulfill its goals under the current conditions. "SSM is trying to figure out, 'How do they provide a mission-based healthcare system for a region?' ey came to a decision that the present model is not sustainable," said Mr. Gustafson. "[Our] purpose is to try to provide really good quality, accessibility to what's happening, as well as keeping the costs under control to the extent that [MU Health Care is] able to do that. We don't do that very well, as you can probably see from some of your bills." While some people worry that MU Health Care's acquisition of St. Mary's could lead to a monopoly of local healthcare, Jonathan Curtright, CEO of MU Health Care, said the move will help lower costs. "Over the long term, the region would be better served, and particularly Jefferson City would be better served, if we could figure out some way that those [facilities] could get consolidated, so that we have services that are big enough that they can support that and spread the cost and be affordable to people," said Mr. Curtright. n Outlook is negative for nonprofit hospital sector, Moody's says By Ayla Ellison M oody's Investors Service issued a negative outlook on the nonprofit healthcare and hospital sector for 2019. The outlook reflects Moody's expectation that operating cash flow in the sector will be flat or de- cline and bad debt will rise in 2019. Moody's said operating cash flow will either remain flat or decline by up to 1 percent in 2019. Performance will largely depend on how well hospitals man- age expense growth, according to the credit rating agency. Moody's expects cost-cutting measures and lower increases in drug prices to cause expense growth to slow in 2019. However, the credit rating agen- cy said expenses will still outpace revenues due to several factors, includ- ing the ongoing need for temporary nurses and continued recruitment of employed physicians. Hospital bad debt is expected to grow 8 to 9 percent this year as health plans place greater financial burden on patients. An aging population will increase hospital reliance on Medicare, which will also constrain revenue growth, Moody's said. n Michigan hospital CEO will take pay cut to boost facility's finances By Kelly Gooch T he CEO of Sturgis (Mich.) Hospital said he'll take a 10 percent pay cut to help the 84-bed acute care facility improve its finances amid planned job and services cuts, according to a Sturgis Journal report. In November, Sturgis confirmed it will eliminate some services and lay off em- ployees as part of a reorganization. The hospital plans to end hospice and ob- stetric services and cancer treatment; reduce inpatient medical and surgical services; and make staffing adjustments in the emergency department. The hos- pital expects the changes to result in the elimination of 60 full-time positions. "They think if I was a smarter CEO, this wouldn't have happened," Sturgis CEO Rob LaBarge told the Journal. But Mr. LaBarge attributed cuts to today's challenging healthcare environment, such as Medicare and Medicaid reimbursements which no longer cover the cost of services. The reorganization will allow the hospital to focus on outpatient services as it looks to partner with other health systems for inpatient and specialty medical services, said Mr. LaBarge. He told the Journal, "I think the decisions that were made are necessary, but it was the hardest thing I've had to do in my career. How do you not love OB? We don't have that many happy places in the hospital, and OB is one of them." Mr. LaBarge told the Journal he "never thought of leaving. I've dedicated 18 years of my life to running this place. This is my community." He added: "As an administrator of an institution, I'm trying to make sure that in 10 years there is still something here that can provide care to people. Some- times you have to make radical changes like this to ensure the future." n

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