Bartlett Regional Hospital has lost an average of about $1.4 million a month for the last six months. For the first time in the hospital’s history, its leaders will have to make major changes to stop the losses.
There haven’t been any layoffs yet, but they haven’t been ruled out either.
“We haven’t fired any staff,” said Chief Financial Officer Sam Muse, who joined the hospital this fall. This is his first week as CFO. “The hope is that we can figure this out in a way that we’re shuffling people around and finding good solutions for every home base staff here.”
He said the nationwide labor shortage makes it especially important for the hospital to retain its staff.
The hospital has been losing about $1 million a month since the summer of 2020, but temporary pandemic relief funding from the federal government masked the problem. The hospital received $12 million a year in 2020 and 2021 and $6 million in 2022.
Muse said inflation and higher labor costs due to the shortage of health workers are driving the losses. The hospital’s costs are going up, but the amount it is paid by Medicare or Medicaid is not keeping up with inflation.
“It’s an issue that all healthcare systems across the United States and certainly in Alaska are trying to grapple with right now,” Muse said.
There are also effects from losing lower levels of medical care in the community. Wildflower Court nursing home has been operating at limited capacity and even had to close a wing in 2021. Hospice and home care programs from Catholic Community Services closed down in September because there wasn’t enough staff.
That means some patients who should leave the hospital can’t. The hospital is not reimbursed for those hospital stays, which can be lengthy.
“We’re providing that care because the community needs that care,” Muse said. “We’re trying to fill gaps, but we also aren’t being reimbursed for it.”
Bartlett has a phased plan to start saving money, and it has already implemented the first two of three phases. Its goal is to begin the next fiscal year, which begins in June, without a budget deficit.
Current actions include hiring restrictions and overtime reductions. The hospital is also cutting incentive pay, reducing traveling and contract employees and offering incentives for retirement.
By the end of March the hospital may have to implement the third phase of its savings plan, which includes cutting programs and reducing its workforce.
In its Friday meeting, the hospital’s finance committee said it would recommend the board adopt the hospital’s plan to reduce costs.
“This is not going to be affecting any type of clinical staff or reduction in staff,” said Board President Kenny Solomon-Gross at the meeting. “The last thing that Bartlett wants to do is have a reduction in staff or lay off people. We might have to retrain people in different areas and move them into areas of need.”
Muse says Bartlett does have cash on hand. Typically, hospitals like to maintain enough cash to operate for six to nine months. Bartlett has enough cash to run for seven months, about $42 million.