North Bay Business Journal

Monday, December 2, 2013, 6:55 am

Palm Drive considers reduction in staffed beds


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    SEBASTOPOL — Palm Drive Hospital is considering a wide array of cuts — one of which would downsize the number of staffed beds from 37 to 14 — in an attempt to meet fiscal challenges that officials say are impacting hospitals nationwide.

    Palm Drive Hospital

    Palm Drive Hospital entrance

    The plan, which has no specific timeline, is in response to continued weakened financials at the district hospital, according to a report from CEO Thomas Harlan that was presented to Palm Drive’s board of directors earlier in November.

    According to an audited report for the fiscal year ended in June this year, the hospital posted an operating loss of more than $4.2 million, an increase from about $3.3 million the prior year. The loss is attributed to declining patient volumes and revenue.

    In September, the hospital had 87 inpatient discharges — 12 percent below budget — while the average daily census of 8.5 patients was 36 percent under budget.  October’s average daily census was 7.9 patients, according to the report from Mr. Harlan.

    In response, the hospital is crafting an operational improvement plan that includes a number of revenue boosting measures, as well as significant cuts that officials hope will provide long-term stability.

    “Our operational improvement plan provides a backdrop of our planning process involved in ‘right-sizing’ this hospital for the essential services we provide,” Mr. Harlan said.

    By reducing the bed count to 14, Palm Drive hopes to bolster core services like its emergency department, while also focusing more on outpatient services.

    “Our emergency department is a core service that is central to our plan. Inpatient capacity as defined by staffed beds will be readjusted to support emergency, surgical and medical acute care admissions,” Mr. Harlan said. “All other support functions will be realigned to support both inpatient and outpatient needs.”

    All ancillary and support departments will similarly be “right-sized” to support the average daily census of nine to 10 patients per day, according to the report.

    While the small district hospital is facing a challenging road ahead, it’s far from alone.  All hospitals are facing a reduction in Medicare reimbursements from the federal government — to the tune of $155 billion over 10 years — which is helping to fund the Affordable Care Act.

    Healdsburg District Hospital recently announced the layoff of 30 employees at the 43-bed hospital, similarly citing uncertainty in reimbursement rates and a 10 percent decline in yearly patient volume.

    Hospitals are also increasingly focusing on outpatient care, part of a wider trend in response to Medicare’s potential penalties for readmission rates and over hospitalization.

    If and when the five-member Palm Drive Healthcare District board approves the new 14-bed plan, the hospital would have 10 medical-surgical beds and four intensive care unit beds.  Mr. Harlan said Palm Drive is not reducing the amount of licensed beds, only staffed beds.

    “So the savings will be in staffing for the lower census we are experiencing as well as departments supporting that lower census,” he said.

    The hospital is also embarking on further consolidations related to its alignment with Marin General and Sonoma Valley hospitals, including human resources functions, IT and electronic health records and business development.

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