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Milford Regional Medical Center says new emergency department will bolster bottom line

8/25/2014

 
By Jessica Bartlett  |  Boston Business Journal   August 25, 2014

Milford Regional Medical Center executives said that nine months into the current fiscal year, the hospital is still recovering from a difficult first quarter, but an emergency department expansion and cost controls are contributing to a stronger bottom line.

Year-to-date, the hospital has operated in the black, bringing in $536,174 in operating income for the nine months to June 30.

The figure is nearly $1.2 million less than during the same nine months of the previous fiscal year, a decline Medical Center President Edward Kelly attributed to a drop in patient volume in the first quarter. The hospital's fiscal year ends Sept. 30.
“We have a lot of fixed costs, so when our volume is down, we feel that. But in quarters two to three, some of the volume has bounced back,” Kelly said.

Throughout the country, cost-containment regulations have created pressure on insurers, which have responded by requiring more outpatient procedures instead of inpatient procedures that are more lucrative for hospitals.

The medical center has been caught up in the trend. In the first nine months of the fiscal year, inpatient admissions are down 445 compared to the same period in the prior fiscal year.

While the hospital has seen increases in observation cases and in nearly half of the departments that offer outpatient treatments, there isn’t enough capacity at the medical center to make up for the revenue losses from inpatient services.

An uptick in behavioral health clients coupled with the lack of inpatient beds for behavioral health often has created a back up in the emergency department.

The increase in behavioral health patients also hasn’t brought in much revenue, as Kelly said these patients often don’t have great insurance or receive treatment that isn’t well reimbursed.

The Emergency Department is crowded with regular patients too, causing the center to miss out on profits from being unable to move patients quickly through the system.

“Our emergency department is constantly crowded, and how we try to move patients quicker is by even seeing patients in the hallway, just to start their care,” Kelly said.

In all, Milford is attempting to accommodate upward of 60,000 patients a year in a setting meant to accommodate 35,000 to 45,000.

Kelly said the construction of a $54 million, 78,000 square foot addition – which will have a new emergency department on the first floor - would help ease congestion. The addition will be able to accommodate up to 70,000 patients a year, increasing emergency department beds from 30 to 52 and nearly doubling its size.

The addition will ultimately allow the hospital to treat more patients and increase revenues, but Kelly said the most important aspect of the growth is it will allow the hospital to treat the right patient in the right setting, hopefully decreasing medical costs in the state as patients can be moved to the adequate levels of care.

The medical center is also bolstering some outpatient programs. The bariatric program, which began in fall of 2012, recently received accreditation. The medical center also just started offering 3D mammography this week.

A 2013 partnership with Boston Children’s physicians has also been bolstered, with the hospital now not only bringing in Children's specialists and staffing a pediatric physician, but to have Children's physicians start seeing patients in the emergency department.

Increased revenue in the form of capacity and services may help drive the center’s bottom line in years to come, but Kelly said the hospital has an equal focus on controlling costs.

“It’s been embedded in health care reform that revenues aren’t going to grow and we’re going to have to make changes to the expense side,” he said.

Currently, the hospital saw a $4.68 million increase in expenses, largely due to a $4.7 million increase in salaries, wages and fringe benefits.

Medical center executives are looking at fringe benefits to discern what is standard in the market. The medical could impose changes unilaterally, as employees are non-union.

There has also been an effort to standardize products and purchase supplies across departments to find savings.

“Sometimes we’re switching products, services, vendors that we use. It’s a continuation of what I would call standard business practices,” Kelly said.


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