5 years later, successes, challenges

It is a tough job running a hospital, let alone two which have been losing money.

Gary Rhodes is filling the role as interim chief executive officer for the Lake Erie Regional Health System of New York, operators of Brooks Memorial Hospital in Dunkirk and Lake Shore Health Care Center in Irving. Rhodes is on loan from UPMC Hamot to help the local hospitals and explained that process.

“We have a strategic affiliation and really what that is is Hamot is providing a menu of services that LERHSNY can pick from. Do you need assistance with revenue cycle issues, do you need assistance with planning, whatever it might be,” he stated. “If they ask for assistance and if we can give it, we give it. In my case … they reached for assistance for a temporary CEO and other things, so that’s why I’m here.

“In the near future, I would say we’re probably weeks away, they’ll be recruiting for a permanent CEO and once that happens, they’ll begin recruiting for a CFO.”

Prior to the merger, local residents perceived Brooks as a community staple and fiscally sound. Rhodes was asked about the community’s perception that Brooks’ losing money has centered around the merger.

“I don’t think it’s fair to blame it all on that, but a decision was made in 2008 to marry the two facilities. I think no matter what, let’s say the hospitals did not come together, you would still have to make some tough decisions because every hospital, free-standing or not, is having the same issues,” he replied. “I think that there’s a great opportunity, particularly to grow the outpatient services. I think that at the end of the day, if it’s done properly, they’ll be very complimentary to one another. I see great opportunity in outpatient growth on the TLC side for their service area.”

Rhodes said a volume decline in elective surgeries is part of the financial problem and has a cause.

“As health plans change and as employers change the makeup of the plan, they change the out-of-pocket portion of the plan, I think it’s only going to increase over time,” he explained. “I think we’re starting to see of some of the effects of that where if an individual has the first $2-3,000 out of their pocket, it will cause you to pause. I think you’re going to see that having an effect on the volumes.”

Rhodes said he didn’t think federal health care reform has had an impact yet.

“I don’t think anybody really knows for sure what that is going to look like. … If folks all have acess to some sort of insurance coverage, that helps.”

Asked about territorial issues between the two hospitals, Rhodes said it still exists.

“That’s one of the things that as we go through this process, we’re going to break down the walls so that people know each other and we teach other and work together.”

The key to survival is local residents using the facilities.

“We need the support of the communities, the physicians, and the employees to make it work,” Rhodes said. “You have to be competitive as people are able and going to make choices in our business a little different than in the past. That’s one thing we can see in the future.”

Rhodes said physicians were being recruited with orthopedics, family practice, OB/GYN, pain management and general surgeon included in the list.

“That could be part of the problem why you have leakage out of the system, because if you don’t have the specialists, you don’t have the physicians, you can’t provide the service.”

The model going forward will include assessment of services in both facilities, according to Rhodes.

“We’ll be doing that in earnest and there will be some services that the communities need but it might not be viable for us to do on our own. So we’re looking at partnering on dialysis with a private partner that keeps dialysis in the community. That’s all they do so the economies of scale there are tremendous.”

Cancer care is another concern.

“We know we need to make major investments, but if you think about that, does that really make sense for a small community hospital to make, really a tremendous investment in cancer care, when we so many significant competitors around us?” Rhodes asked. “We’re looking at providers that would be interested in partnering with us.”

A renovation of Lake Shore’s emergency room is nearly done and a growth of outpatient services at the Silver Creek facility is in the works, according to Rhodes.

“We’re looking at a musculoskeletal center there, which really means all the services connected with orthopedics will be in close proximity and you’ll have rehab and everything right there,” he explained. “That’s part of the process of us looking at the two facilities and making sure they’re complimentary. You have to limit as much duplication as you possibly can. You will always have some.”

Rhodes said he didn’t anticipate a lot of services being shifted from Brooks to Lake Shore.

“You do have some what of a unique market and draw area. I was asked a question: ‘if we focus heavily on outpatient at Lake Shore does that mean we won’t have outpatient here?”‘ Rhodes stated. “The answer to that is no, because if you look at the area served primarily by Brooks, it’s definitely a different area. So if we were to withdraw those kinds of services to this area that would cause people to go somewhere else.

“I don’t see that, I don’t have a crystal ball, but I don’t see that.”

Planning is the next step, according to Rhodes, with the board of directors, senior management and physicians set to meet shortly. He added that both hospitals would remain open for the foreseeable future.

“The board is really focused on taking the right steps to not only keep the system going, but to be able to expand and grow. That’s definitely a board-driven process,” he explained. “We’re trying to streamline all operations between the two facilities, things that were not done before and we’re essentially merging departments. There’s a lot of two of everything and where possible, you really can’t afford to do that anymore.”

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