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Methodist Hospitals completes $76 million financial turnaround in one year
MERRILLVILLE, IN February 15, 2010 | In just one year, Methodist
Hospitals has reversed 6 years of operating losses and posted a
surplus of approximately $3.4 million in 2009. While an operating
surplus is always good news, it is a remarkable achievement after
experiencing approximately $73 million in losses in 2008.
The hospital’s exceptionally rapid turnaround is, in large part, due to
vigorous and ongoing analyses and control of hospital expenses.
Also, under the leadership of its President & CEO, Ian McFadden, a
senior leadership team was assembled with the expertise and
experience to make immediate bottom line impact.
“The success of this turnaround was all about execution and speed,” said
McFadden. “There was no time for a honeymoon. Our executive team had
to quickly identify potential areas for improvement, and make the
necessary changes as fast as possible. Fortunately, we had great
support from our Board which allowed us to move quickly and
efficiently in implementing change.”
To achieve its goals, an operational improvement plan was put in place
that yielded more than $28 million in savings. Through the team’s
efforts, the hospital was able to negotiate more favorable managed
care agreements and other service contracts, including a new
pharmacy services contract that saved the hospital $1 million. The
hospital also brought back for internal management, seven hospital
departments, such as environmental services and transportation,
which were previously outsourced to more expensive contractors, and
eliminated its skilled nursing unit.
“We did not pursue any efficiencies or take any actions that could
diminish the quality of care delivered to our patients,” said
McFadden. “While considering any change, we evaluated our potential
quality of care performance against accepted standards. Maintaining
our quality was paramount and a requirement as we executed this
financial turnaround.”
In fact, some cost-saving initiatives are expected to enhance patient
safety and satisfaction.
“At the beginning of last year, 10 percent of our nursing staff was
comprised of nurses who were employed by outside agencies and not
Methodist,” said Loren Chandler, Methodist vice president and chief
financial officer. “Now, the entire nursing staff consists of
Methodist nurses who share the same commitment to our patients,
along with the same training and evaluation processes.”
The Methodist Hospitals financial turnaround was accomplished during a
period of national economic distress, which decreased patient
volumes at hospitals across the nation. While inpatient admissions
at Methodist decreased slightly from 2008, consistent with other
northwest Indiana healthcare institutions, outpatient services and
procedures increased form previous years.
Methodist Hospitals lives its mission through providing services at
several campuses. Its Northlake campus in Gary serves as an urban
safety-net hospital, providing care to many low-income, uninsured
and individuals. Its Midlake campus provides outpatient and
educational services.
In Merrillville, Methodist continues its tradition as the region’s leader
in specialty care. For example, the hospital’s nationally recognized
Neuroscience Institute, its Oncology Institute, and Northwest
Indiana’s only Bariatric Surgery Center of Excellence are located on
Methodist’s Southlake campus.
The turnaround was also accomplished without a significant increase in
Disproportionate Share Hospital (DSH) payments from the State of
Indiana. For filling its role as a safety-net institution, Methodist
received $40 million in 2009, similar to the payments it received in
the 2 preceding years. DSH funding is distributed to all Indiana
hospitals that meet certain criteria.
“We take our role as stewards of public funds very seriously,” Chandler
said. “Careful spending, transparency and accountability are not
just good business operating principles that contributed to our
turnaround, they are also what the State rightfully expects for the
support it gives to hospitals.”
This 1st. Phase financial turnaround is the beginning of
Methodist’s return to prominence; the improved financial performance
is enabling the hospital to undertake a multi-million dollar
investment on both hospital campuses, which will include facility
enhancements and new technologies. Methodist is also embarking on
the expansion of physician practice sites and concentrating its
growth strategy on the unique specialty services it provides.
“I am very
encouraged by these results,” said McFadden. “They are evidence that
our operational improvement strategies are generating needed
financial performance to continually improve the quality of care and
service we provide to our patients. While the hard work of our
dedicated staff and physicians is making a significant difference,
we still have opportunities for further improvement and we will
remain focused on ensuring that Methodist will be a leader in health
services in Northwest Indiana and beyond for decades to come.” For more information or to interview/photograph Methodist
Hospital employees, please contact me, my contact information is
located below.
Evelyn Morrison
Marketing and Corporate Communications
P: 219.886.4412
E:
emorrison@methodisthospitals.org
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