Finances Improve at Windemere, Hospital

By JULIA WELLS

The Windemere Nursing Home and Rehabilitation Center ended the year in the red once again, but senior managers said this week that the $200,000 operating deficit is a big improvement over last year and a step in a better direction for the Island's only nursing home.

Martha's Vineyard Hospital chief executive officer Tim Walsh said yesterday that some hard-won rate relief from Medicaid played a big role in cutting the numbers at Windemere this year.

"We have adjusted the rate structure; we're back on track and we've gotten the loss down to something that is manageable," he said.

The hospital CEO is also currently the acting administrator for Windemere. The nursing home is an affiliate of the hospital; the two institutions share the same campus.

Windemere, whose corporate name is WNR Inc., ended its fiscal year on Dec. 31.

Total revenues at the nursing home were $4.8 million for the year while total expenses were just over $5 million. Gifts of $68,000 will go toward reducing the operating loss, leaving WNR with a $135,000 operating deficit for the year.

Mr. Walsh spent the better part of the year negotiating a new rate structure with Medicaid that will add another $200,000 in revenue. The nursing home has not actually received the reimbursement yet, but the new rate structure is permanently in place, Mr. Walsh said.

"We don't have the cash, but the deal is done," he said.

About 70 per cent of the revenues at Windemere come from Medicaid, the state and federal insurance program for low-income residents.

Cash at Windemere is up - as of Dec. 31, cash on hand was $339,000, up from $189,000 for the same period last year. "It's a little more comfortable," Mr. Walsh said.

Windemere has lost money since it opened in 1994. In 1996 the nursing home was forced to declare Chapter 7 bankruptcy when it defaulted on an $8 million bond that was used to build the home. The Windemere bankruptcy later led to a Chapter 11 bankruptcy for the hospital.

The hospital came out of bankruptcy in 1998 after an emergency board of trustees stepped in to turn around the crisis.

Following a complicated series of maneuvers and another period of instability under a subsequent board of trustees, the hospital brought the nursing home back under the wing of the hospital by retiring the bond that had been used to build the home. The move meant fresh debt for the hospital. The hospital is also now helping to carry Windemere by subsidizing the dietary services it provides to the nursing home. The annual cost of these services is about $300,000; Windemere currently owes the hospital more than $1 million for dietary services from the last three years, Mr. Walsh said.

Windemere is also currently operating without an administrator; former administrator Philip Hickey left two weeks ago. Mr. Walsh said he is working to secure an interim administrator to fill the gap while the hospital searches for a permanent replacement. Meanwhile, Mr. Walsh, who also has the credentials to run a nursing home, will serve as acting administrator.

The hospital trustees are also the trustees for WNR.

On the hospital side of the ledger, business is booming. Financial statements show that the hospital ended its third quarter with a healthy revenue gain due to higher volumes across the board.

Through December business is up in acute care and also the emergency room. Mr. Walsh said it looks like January will show the same picture.

"We've been pretty busy," he said.

He said some of the business is related to the flu outbreak that hit hard around the holidays, but he said the hospital is also reaping the benefit of a new skilled nursing program that is in place in the acute care wing. The program allows Medicare patients to receive skilled nursing services such as post-surgery care in the acute care section of the hospital. Because of the way Medicare reimbursements work, patients are ordinarily required to go elsewhere to receive skilled nursing care after surgery - for example, a patient with a broken hip would be required to move out of acute care into a rehabilitation facility for the recuperative period following surgery. On the Vineyard these patients can now remain in acute care for post-operative services; patients who have surgery at another hospital can also return to the Island and receive skilled nursing care at the Vineyard hospital.

The new skilled nursing program was made possible after the hospital won designation as a critical access facility - a special designation that allows the hospital to be reimbursed for actual costs. Mr. Walsh said the skilled nursing program is better for patients and better for hospital revenue, but he admitted that it has had an impact on Windemere, which has seen a drop in this kind of business as a result.

"We're working to try and streamline all of that," he said, adding:

"It's a nice program and it's really just starting to get going. I think the patients are glad to have it - it makes it easier for them."

Total operating revenues at the hospital through December were $23.5 million, some $491,000 over budget for the year and well ahead of the $21.4 million in revenues for the same period last year.

Total expenses at the close of the third quarter were $22.3 million, leaving the hospital with an operating gain of $1.1 million. Gifts stood at $634,000 for the year, down from the previous year, but Mr. Walsh said the true picture shows that gifts are way up because the hospital did not do a summer fund drive this year. Gifts in the month of December were significantly up - $213,000 compared with $42,000 the prior year. December gifts can be mainly tracked to the annual appeal; Mr. Walsh said January gifts look like they are also running well ahead of last year.

Cash is also up on the hospital side; at the end of December the hospital had $3.3 million in cash.

"This is the strongest it's been in a long time. Cash is king. It helps to verify the numbers you are showing on the income side," Mr. Walsh said.

The hospital fiscal year runs from April 1 through March 31. The third quarter is traditionally a period of heavy losses for the hospital, because it is the Island's quieter off-season.

Mr. Walsh said current projections calls for the hospital to end the year with a modest operating gain of about $300,000. He said the real aim is to end the year in the black on a consolidated basis (combining the numbers for Windemere and the hospital).

"That has been our goal - to get the whole enterprise in the black. And I am very optimistic now that we are going in the right direction," Mr. Walsh said.

It all adds up to an auspicious start in the new year for the Vineyard hospital, which is now deep in the design phase for a new building to replace the badly ailing physical plant on Linton Lane in Oak Bluffs.

The cost of the new hospital is expected to be $50 million. No formal capital campaign plans have been unveiled yet.

Concluded Mr. Walsh:

"I think we have accomplished a lot, and we are at least heading in the right direction now."