SEBASTOPOL – Coming in the wake of a management shakeup drama and with less than two weeks before a key deadline to exit bankruptcy reorganization, recently installed Palm Drive Chief Executive Officer Neil Todhunter has a lot to accomplish and little time to waste.
The BRIM Healthcare Inc. executive told staff in a letter Aug. 7 that while finances and usage of the 37-bed district hospital are improving, “there is still a long way to go before we can say the hospital is self-sustaining” and they should expect significant changes soon.
Mr. Todhunter assumed the role following the contentious exit of previous CEO Jim Russell, and he is now working to mend the wounds, cut costs and increase revenues. The Palm Drive Health Care district signed a 120-day trial contract with the Brentwood, Tenn.-based hospital management company Aug. 3 that, if extended, would amount to about $250,000 annually. Founded in 1971, BRIM currently operates 37 acute care hospitals in 18 states.
In his third week, the 25-year veteran hospital administrator led a top-to-bottom review of finances with eight BRIM consultants, and he is now racing to meet a Sept. 1 deadline for bankruptcy proceedings. He presented a budget to the district last week and announced Aug. 21 that 16 full- and part-time positions will be eliminated or changed (see story “16 positions impacted in Palm Drive cuts“).
“We will have to make some big changes fast, particularly to the cost structure,” he said in an interview last week.
“Right now we are evaluating the number of people and making sure it is right for the size of the hospital and analyzing services to see if they make sense for the need in the community.”
The company is completing a market analysis to examine which services are the most profitable and which could be eliminated or expanded. Average daily census is currently up about 28 percent year-over-year, but the hospital still projects a budget deficit of about $175,000 for the current fiscal year.
“BRIM thinks there is a lot of opportunity for this hospital. Its greatest advantage is the clear support for its services from the community and quality of staff and physicians. Just like any business, it’s a matter of getting spending and revenues in line,” Mr. Todhunter said.
Earlier this week, he commended hospital leaders’ foresight in developing the outpatient “1206D” clinic, which is now one of the largest medical groups in the county and whose physicians have contributed greatly to inpatient referrals. Though planning is still preliminary, the outpatient services will be the target of most expansion as well as inpatient surgery equipment.
“There is no question that this facility and equipment needs some improvement, but our first priority is improving financial performance,” the administrator said.
As one of his first actions in office, Mr. Todhunter halted financing on the IT contract that was the apparent catalyst for the former administrator’s exit. Though he does plan to make capital improvements soon, nothing will be spent until bankruptcy proceedings can be finalized, something he hopes will occur in the six to nine months.
Hospital leaders attempted to garner a line of credit to cover payments to creditors earlier this year, but subsequently received a sub-investment grade bond rating and were unable to secure financing.
Now with time ticking before the current adjustment plan for exiting Chapter 9 expires early next week, the hospital will need to track down between $750,000 and $1 million or come to a consensual agreement with creditors while another plan is written.
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