Grays Harbor Community Hospital has paid Navigant Consulting nearly $1 million in the first two months of their relationship, but hospital CEO Tom Jensen says the hospital might have gone under without help from the consultants.
“As expensive as they are — and they are — I don’t know if we could have made it to July when the budget proviso money kicks in,” Jensen said last week, referring to a proviso local legislators and the governor had placed in the state budget to include a higher reimbursement rate when the hospital treats Medicaid patients.
The hospital lost about $8 million in 2017.
At the urging of Key Bank — which holds a mortgage of more than $30 million on the hospital — and the bond insurance company that would have to pay Key Bank if the hospital defaults on the loan, Navigant was brought in to stabilize the hospital.
Navigant is a large firm specializing in the medical industry. It is traded on the New York Stock Exchange and had revenue of $1.032 billion last year. It has been on the job at Community Hospital since the last week of March, charging fees of $959,363, as of May 24.
Initially, the consultants made an assessment of the problems and now they are helping hospital staff implement a plan to fix them. Jensen said they don’t just hand over a report about what needs to be done, but furnish “subject matter experts” in specific areas to train employees and help with the implementation of new procedures.
Jensen said it feels like the money has been well-spent. “I don’t think we could have made these changes without what they call subject matter experts.”
Every area of hospital operations has been scrutinized, including the clinics that are subsidiaries to the hospital. The recommendations have resulted in a substantial number of layoffs and staff cutbacks at every level. Two key executives, the chief financial officer and chief operating officer, left and have not been replaced. A number of other administrators were either laid off, or have left or have had their pay cut.
The consulting relationship likely will continue until next April, Jensen said, but communication will remain open until December 2019.
“Their focus is that by year-end we’ll be at break even. That’s based on the assumption that (patient) volumes don’t drop off. If volumes stay the same, we should be in the black by the end of the year, and by next year, we should be able to see a (profit) margin,” the CEO said.
Jensen said he knows that some people have criticized the hiring of consultants. “The key for me is that I have to do whatever it takes to keep this hospital afloat and I don’t think we could have done it ourselves. People will say, ‘You shouldn’t have spent that money.’ If we hadn’t, I don’t think we could have made it.”
But success still depends largely on whether people use the local hospital instead of going out of town for services, he said. “If the community doesn’t rally around the hospital and makes choices to get services elsewhere, I can’t keep it going,” Jensen said.