Board chairman Chris Lanski's statement last week was an unexpected bombshell on community members and employees regarding Brooks Memorial Hospital. From 2011 to 2013, the facility that employs some 400 people in Dunkirk has lost $6.3 million.
This year, it is on pace to lose as much as $4 million.
"It's a serious situation," said Gary Rhodes, interim chief executive officer at Brooks Memorial Hospital in an interview with the OBSERVER. "There's no two ways about it. There's no easy fixes. Now the stuff is all difficult."
Rhodes, who also serves as chief executive officer at Kane Community Hospital in Kane, Pa., has no expectation the finances will get better next year. To his disappointment, the hospital is likely to run another deficit in 2015, though the complete process has yet to begin.
"We're on budget (this year)," he noted. "This is where we expected to be."
So bad are the finances that it brought state Sen. Catharine Young to the rally at Washington Park on Thursday regarding the impasse in contract negotiations between the hospital and 175 workers represented by Service Employees International Union 1199. She voiced concern the hospital is headed down the same road as TLC Health Network in Irving.
"It's a serious situation. There's no two ways about it. There's no easy fixes. Now the stuff is all difficult."
Brooks Memorial Hospital interim chief executive officer
"I just want you to know that we understand what you do," she said about the staff. "We're grateful for what you do and we want you to be able to continue to do what you do by having a job at Brooks Memorial Hospital."
Rhodes and Jack Davis, vice president of administrative services, met with the OBSERVER last week to give an update on the current labor situation and what the future holds for the financially strapped facility. During the more than one-hour interview, the administrators talked upbeat about plans for the future while emphasizing the current model of the hospital needs to be changed to turn around four years of deficits.
To those on the outside, it looked as if Lanski's statement was an attempt to negotiate in public after the SEIU 1199 announced its intention to picket the hospital.
That's a fair observation. In recent years the hospital has not been transparent about its finances, though anyone with a keen interest could look up some of the details on the hospital's Internal Revenue Service 990 reports for 2011 and 2012 online.
Though the 2013 figures with the IRS are not yet available, the 2012 documents reveal the hospital brought in more than $43 million in revenues, but had expenses that exceeded $45 million.
SEIU 1199 workers, according to a union spokeswoman, specifically pin blame on the University at Pittsburgh Medical Center for the woes. "The workers are quite upset about the control that the University of Pittsburgh Medical Center seems to have on the process," said Mindy Berman last week. "The hospital keeps playing that down, but the fact is the three top administrators at the hospital are UPMC people."
Staff of SEIU have been working without a contract since the end of April. "If people don't have good wages and benefits, what does that mean for the local economy?" Berman asked earlier this week.
But Brooks officials say the snag is more about the language in the contract than the salaries. For instance, in the current deal, workers receive overtime before working a 40-hour week. How that would happen is if an employee is scheduled for a eight-hour shift but is asked to stay another 30 minutes. Those 30 minutes - even if the employee does not work 40 hours - are paid at time and a half. "If you work more than your scheduled hours, it's overtime," Rhodes said.
Paid time off for staff are a sticking point as well. Currently, some employees receive more than 40 days off in the contract. Brooks is seeking to lower those numbers.
"Labor is the issue," Rhodes said. "We're talking about reducing paid time off."
Even with a federal mediator called in two months ago, the contract remains unsettled. Some of this may be due to disagreements within the union. Insurance costs and potential providers may also be a point of contention. Hospital administrators did not speak to these issues.
Lanski's voice in the contract dispute, Rhodes said, is due to state law. Because Rhodes is an interim chief executive officer, the board becomes the negotiator of the contracts.
Currently, Brooks is in a "consulting agreement, not an affiliation agreement," Rhodes said.
Rhodes' interpretation of the consulting agreement is that the nine-member board of directors continues to have control over what happens at the Dunkirk hospital and is not yet considered a part of the Pittsburgh-centered group. As an affiliate, Brooks would become a part of UPMC.
That is different situation than what has happened in Jamestown. WCA Hospital has become an affiliate of UPMC and is listed so on the UPMC web site as is the Warren General Hospital located about 70 miles from Dunkirk in Pennsylvania.
Kane Community Hospital, which is where Rhodes is based, also is an affiliate hospital.
Rhodes and Davis see progress regarding a number of issues as strategic planning for the facility is continuing. Both discussed a number of highlights that have occurred in recent months:
Two new obstetricians and gynecologists have been hired with one already practicing and another coming aboard in October.
Two new pediatricians are also on board and ready to work with Brooks.
Efforts are continuing in recruiting a new general surgeon.
There is a new physician improvement committee that has a goal of recruiting one new primary care physician and one mid-level provider each year. "That's not enough," Rhodes noted, "but that's a start."
A new fast-track approach has begun in the emergency room, ending long delays for those who visit with a minor problem. The initiative is still in the early stages. "Our goal is to get people in and out in 60 minutes and we're pretty close to that," Rhodes said.
Brooks also is on the cusp of a partnership with Westfield Memorial Hospital that would expand its primary care. "What we're trying to do is to serve our communities by providing access," Rhodes said. "The deal there is we do some minor surgeries in (the Westfield) hospital and we do deliveries of babies and those sorts of things (at Brooks)."
To quell concerns about Brooks becoming a satellite facility for both WCA Hospital and UPMC Hamot in Erie, Pa., both Rhodes and Davis indicated an effort is being put forth to make all in-patient rooms private. Each room will get a minor overhaul and six rooms will be dedicated to orthopedics.
"It doesn't sound to me like anyone who is going out of business or planning on going out of the in-patient business," Rhodes said. "Those are just scare tactics."
In the past, hospitals made a major chunk of their revenues from the in-patient stays. Within the last decade, that has changed.
"The model is going to be mostly about outpatient, recognizing there's time you have to have the inpatient admissions," Davis said.
Currently, administrators say the hospital has an average census of 25 patients per day. That is a decrease of more than 50 percent from recent years when the hospital always had an annual surplus for operations. In that era, 65 beds were available for patients.
"Inpatient hospitals that are brick and mortar boxes like this have a very short shelf life because, quiet honestly, the old scenario was about 70 percent of the revenues were inpatient, 30 percent were outpatient," Davis said.
In the meantime, the more than $6 million loaned to TLC Health Network in Irving in the last year did not come from Brooks' operating expenditures. It came the hospital's savings account, which continues to dwindle.
Rhodes did not speak long about prospects if finances do not get better at the facility. "We're looking at bankruptcy in the future if we don't get it to turn around," he said.