Dissatisfied with the apparent slowness with which cost-saving measures are being implemented at Riverside County Regional Medical Center, the chairman of the Board of Supervisors this week demanded answers from consultants hired to return the hospital to fiscal health.
"You're six months into your contract. Why are we not seeing more benefits?", board Chairman Jeff Stone asked Jill Olsen, senior director of Chicago-based Huron Consulting Inc. "Our hospital is in an emergency situation."
Stone's displeasure stemmed from a biweekly update provided by Huron and RCRMC CEO Lowell Johnson showing the hospital's cash shortfall at the end of the current fiscal year only declining by an estimated $1.2 million -- from $83.2 to $82 million.
The chairman noted that Huron was in the process of "launching" initiatives intended to save the county up to $58.1 million, but had not actually implemented any of them.
"We chose your firm because we believed it would be the one to help us get back on track again," Stone said.
Olsen explained that the "launched" category represented "a trajectory of where we're going to be" and that it would "take two to three weeks" before the consultants could begin factoring which initiatives would translate to actual savings -- and the likely amount -- in the current fiscal year.
RCRMC Chief Financial Officer Chris Hans defended Huron's strategy, pointing out that efforts had already netted $9 million in savings on salaries and benefits. He said factors out of the consultants' control included a quarterly loss of "patient traffic" that Hans attributed to Obamacare.
"We don't have a handle on that exactly (but) we think it's because people have more choices now; they're trying other hospitals," Hans said. "We're hoping that with the improvements we're putting in place, they'll come back."
According to the CFO, the dip in patient traffic has resulted in $12 million less revenue.
Stone reiterated concerns he raised last week regarding the Moreno Valley hospital's unresolved treatment authorization requests, or TARs, which are submitted to private insurance companies, as well as Medi-Cal and Medicare, to receive payment for services rendered to patients.
Documents provided by Johnson indicated there was a backlog, accumulated since January, of 782 TARs, representing $61.4 million in outlays. Johnson apologized for the logjam, informing the board "the wrong person" had been in charge of managing patient authorizations, but that individual had been replaced.
Lowell's update to the board Tuesday noted that "the (TARs) backlog has not yet stopped growing," prompting Stone to call on the Executive Office to reassess the hospital's billing practices and take "appropriate steps to obtain reimbursements" from insurers.
Stone, a licensed pharmacist, sympathized with county staff trying to procure payments from Medicare and Medi-Cal.
"These agencies are changing billing codes intentionally," hoping a year will pass and they will no longer have to issue payments, Stone said, though still insisting that more should be done to clear the backlog.
A progress report released by Huron in February indicated RCRMC would be put on a path leading to eventual amortization of its nearly $50 million in annual red ink, thanks to changes in labor usage, lower-cost pharmacy programs and implementation of a host of other operational efficiencies.
Both Johnson's $1.2 million contract and Huron's $26 million contract are slated to expire at the end of next year, though the county has early- termination clauses that can be exercised at any time.