GLENS FALLS — The leaders of Glens Falls Hospital are working to avert a financial crisis through cutbacks in money-losing services, an affiliation with Albany Medical Center and an emphasis on what the hospital does well.
Hospital leaders met Tuesday with The Post-Star’s editorial board to discuss the institution’s finances, its pending affiliation with Albany Medical Center and a push to promote itself to the community.
The hospital is serving an aging and low-income population in a health care environment where patients are moving away from a reliance on traditional hospital services.
In 2017, the hospital suffered operating losses of about $12 million, said Dianne Shugrue, the hospital president and chief executive officer. Last year was a bit worse, she said.
The American Hospital Directory, a website that collects data from public and private sources to compile hospital profiles, reports that in 2017, Glens Falls Hospital recorded a more-than $30 million loss on gross revenue of more than $1.1 billion.
The $30 million figure includes non-operating revenues and a loss associated with a system conversion, according to a hospital spokeswoman, Katelyn Cinzio. The hospital's net revenue in 2017 was about $308 million, Cinzio said.
The hospital’s survival cannot be taken for granted, Shugrue said.
“Hospitals close every day in the United States, and we don’t want to be one of them,” she said.
Short-term, the hospital leadership has put together a 2019 budget with a much smaller operating loss, she said. She expects the affiliation with Albany Med to be official by Jan. 1 of 2020, and she wants Glens Falls Hospital on sound financial footing first.
Hard choices are being made, such as cutting back hours at the primary care centers the hospital runs in Salem and Granville and closing its Acute Inpatient Rehabilitation Unit and its Center for Occupational Health. Later this year, when the lease ends at the Fort Edward primary care center, the hospital will consolidate it with the Hudson Falls center.
The salaries of top administrators have been frozen.
“The things we have to do are difficult. The community health centers don’t make a profit for us. Those are the types of decisions we have to make,” Shugrue said.
The hospital is dedicated to serving the community, but at the same time, she said, “We’re not a public utility.”
“Our heads are down. We’re working hard. It’s daunting,” she said.
A difficult mix
The hospital’s patient mix works against its financial viability, as 82 percent of inpatients use Medicare or Medicaid to pay their bills. These government insurance programs, striving to keep costs low, reimburse the hospital for less than it spends, Shugrue said.
Medicare is federal health insurance for people who are 65 or older and some younger people with disabilities. Medicaid is a joint federal and state program for low-income adults, their children and some people with disabilities.
With 3 percent of the hospital’s inpatients classified as “other” — meaning bad debt, in many cases — just 15 percent are using commercial insurance, which gives the highest reimbursements. Other hospitals, such as Saratoga Hospital, have higher percentages of commercially insured patients and are more profitable.
As an example, Shugrue imagined a 64-year-old patient with commercial insurance who gets a total knee replacement. The insurance reimbursement is $38,000.
A year later, 65 and on Medicare, he gets the other knee done, and the reimbursement is $12,000.
“Public payers have to control costs, but it’s devastating for community hospitals such as ours,” she said.
At the same time, the hospital has been losing customers:
- Patient volume in the Emergency Department fell from 50,000 in 2017 to 46,000 in 2018;
- Diagnostic X-ray procedures fell in recent years from 19,000 to 12,000;
- Inpatient discharges are down 1,000 over the past three years;
- Surgeries are down 2,000 over the past three years.
Patients with less serious issues are choosing alternatives to the emergency room, such as urgent care centers, which is good for patients but not for the hospital’s bottom line.
“It’s a good thing. They get faster treatment, the same quality of care, and it’s cheaper,” Shugrue said, but — “How do we make up for the loss in our revenue stream?”
The hospital has high fixed costs: It has to stay open all day, every day; it has to staff and clean and heat and light its enormous building.
“The challenge in health care policy that nobody has figured out is how to pay for the most expensive parts of health care,” she said.
A stronger partner
The affiliation will involve Albany Med in oversight of Glens Falls Hospital — the Albany Med board will be able to hire and fire the CEO in consultation with the Glens Falls board, for example.
The affiliation could also help through joint purchasing of supplies and cooperation, instead of competition, in the acquisition of expensive medical equipment.
But, Shugrue said, “Albany Med doesn’t have a magic wand.”
One goal of the hospital’s leaders is to do more to promote its successes.
“We’ve got to do a better job connecting with our community. We’ll own that,” Shugrue said.
The hospital is holding an invitation-only forum with community leaders to make its case and has commissioned a survey from Siena College on local perceptions of the institution.
Its leaders are stressing professional recognitions the hospital has received and its current effort to be designated a “magnet hospital” that offers outstanding nursing services.
For now, some planned improvements, such as construction of a “medical village” funded by a $20 million state grant, are waiting on the affiliation effort.
The affiliation should raise the hospital’s public profile and help with promotion. Also, it could be necessary to its survival.
“Without being part of something bigger, the downward trend will continue,” Shugrue said.