KCH Annual Report 2008-2009

J. Gary Rhodes, FACHE

These are challenging financial times and healthcare is front and center in the national debate on the economy and reform.

KCH has experienced some decline in activity over the past year as patients defer elective care and many are faced with job losses, benefit losses or reduced work-place benefits.

Unlike many hospitals we have not seen a significant increase in patients without insurance, but we believe many of those patients in our area are staying away and only postponing or neglecting preventive and elective healthcare procedures. We have seen an increase in E.R. visits.

The Kane Area Chamber of Commerce held its annual breakfast meeting at the Kane Community Hospital to hear the 2008-09 KCH Annual Report from Gary Rhodes, KCH CEO. Among those taking part in the meeting from left to right were: Connie Grenz, General Manager, Kane Hardwood, a Collins Pine Company and member of the Kane Area Industrial Development Corporation (KAIDC); Kane Mayor Doug Caldwell, vice president of the Chamber; Peg Kepler, General Manager of The Kane Republican and a Chamber Board member; Rhodes, Jill Thompson, legislative assistant for State Rep. Kathy Rapp (R-Warren) and president of the Chamber; and Amber Hancharick, Executive Director of the Kane Area Development Center (KADC) which includes the Chamber and the KAIDC. Rhodes is also President of the KADC.

The main focus of our strategic planning efforts for the past year have focused on partnering with a strong regional hospital so that we are well-positioned for the future. No one can be sure of the future, but we are expecting reduced reimbursements and increased demand.

Our goal is to continue to create flexibility and continue to reduce costs as we have successfully done in the past. Over the past year we have taken painstaking stock of our operations to identify and minimize potential liabilities and to identify and leverage our assets for the future.

Here are a few of dozens of actions we took this year to streamline costs and improve our financial position:

  • We got out of the real estate business. We formed a Joint Venture with Hamot at Johnsonburg Medical Park. The facility is now known as Hamot Medical Park -- Johnsonburg, while the Park remains a service of Kane Community Hospital. We have strategically moved other offices to facilities we own and leased those vacated to others.
  • We found strong alternatives to manufacture's maintenance agreements for high tech equipment that will insure and maintain our equipment but saves hundreds of thousands of dollars annually.
  • We created a team to continually review the entire revenue cycle process and hunt for obstacles and recommend solutions to reduce turn around time in coding and billing and greatly enhanced cash flow.
  • We reduced our workman's compensation by tens of thousands annually through targeted employee safety training and education.
  • We did extensive reviews of all units and programs, created benchmarks and implemented many cost saving and efficiency measures.
  • We have readied our hospital to take full advantage of extended Hamot resources with volume purchasing, physician recruitment, specialties, and extending training beyond the traditional Hamot Grand Rounds for medical staff to management and technical training for KCH leaders and tech staff.
  • We evaluated every program. This review resulted in staffing model changes, reduced administration days, changed call plans, discovered lost charges. In our systematic review we were able to significantly reduce costs that make us an even greater asset and attractive partner.

We continue to recreate ourselves and our facility to enhance flexibility and our capacity to turn-on-a-dime, one of the benefits of being a small hospital.

In order to maintain and improve services for the community, it was the consensus of the Board, and Management that the most desirable partner for the future would be Hamot, and so we have been working together for the past many months to formalize the relationship. We are very close and expect to formally announce the particulars in a matter of weeks.

We continue to provide primary care services in the communities of Kane, Johnsonburg, Sheffield, Ridgway, and Mt. Jewett through our system of hospital-based clinics.

We have improved the services provided by our imaging department by establishing a women's diagnostic breast center offering leading edge digital mammography, stereotactic breast biopsy, ultrasound and, we are renovating our MRI suite for our new high strength MRI with installation due late November or early December. (Those who might be interested in touring these areas, may do so after this meeting.)

We have also replaced anesthesia equipment in the operating rooms, and are in the process of updating our orthopedic equipment.

Beginning in October we will offer state-of-the-art urology services with Donald Rudick, M.D. who is expanding his practice to Kane. The services will include laser surgery. We continue to look for ways to improve quality, reduce costs, and expand services. Our ability to do that will be significantly enhanced by our new relationship with Hamot Medical Center, while maintaining control of our day-to-day operations.

Last year we served over 32,000 patients in our clinics, 5,800 in our E.R., performed over 107,000 lab tests, 18,000 radiology procedures, and over 1000 surgeries. Our admissions were 1,086 and patient days were over 4,600.

Seventy (70%) of our acute inpatient days were Medicare, 3% were Medical Assistance, and 11% Blue Cross. Our gross revenue was $44 million, with over $25 million in unreimbursed care and nearly a $1 million in bad debt expense. Total expenses were $19.2 million leaving a net loss of approximately $200,000.

We have 167.3 full-time equivalents and approximately 200 total employees.

Over the next few months, working with Hamot, we will be engaged in strategic planning and work to continually improve services, improve quality, and enhance productivity and financial performance.

Gary Rhodes, CEO
Kane Community Hospital