When Keith Butler arrived at Iraan General Hospital in April as a consultant serving as interim Chief Executive Officer, he knew there were some issues to be resolved in the hospital’s accounts receivable.
It didn’t take him long to realize that problems in the business office extended to benefits, insurance, sick time and salaries.
“If we didn’t take action, the hospital would’ve closed its doors in 18 months,” Butler said.
Five months and some difficult and controversial decisions later, the ship appears to be righted – so much so that the hospital district’s board of directors voted last week to make Butler the permanent CEO.
Butler said that he didn’t plan on taking the position permanently when he arrived.
“Not initially,” he said. “I enjoyed the staff. I enjoyed the providers. I started thinking that it might be a good place to stay. I haven’t been a full-time CEO since 2013.”
Butler spent 13 years as CEO of Lillian M. Hudspeth Memorial Hospital in Sonora. His tenure at the Sutton County hospital included overseeing digital imaging equipment and being honored in 2009 with the Texas Hospital Association Rural Hospital Constituency Council’s Pioneer Award for demonstrating “creative and innovative leadership in the organization and community he or she serves.”
The district board opted to bring in a consultant after it ordered a forensic audit of the hospital’s finances and wasn’t pleased with the results.
Teresa Callahan, a nurse practitioner who also served as CEO was given the option of stepping down from one of the two positions. She elected to leave the CEO post. She still is serving as a nurse practitioner.
“Teresa Callahan did an incredible job here,” Butler said. “She’s a good person. She did an awesome job building this hospital and creating the district. She needs extreme credit for that.
“But unfortunately, under her watch, the business office got away from her. And, unfortunately, she has to take responsiblily for that.”
The Chief Financial Officer, Kathy Parmer, had already given notice. She had less than two weeks left by the time Butler arrived.
Nelia Hernandez was promoted to CFO. Teresa Tucker, who had worked for Butler in Sonora, had, ironically applied for a business manager opening before Butler came on board. He quickly hired her on.
The first challenge was getting the billing and collections in order. More than $2 million in accounts receivable were spread over four systems. The audit had found an uncashed check for $10,000 and another that had been partially shredded.
Timely billing is critical in healthcare as many insurers, as well as Medicaid, require billing be submitted in 90 days.
In the end, the hospital wrote over about $1.2 million is provided services.
Butler also updated charity and uncompensated care programs, as well as setting up standardize time for payment of patients co-pays and items not covered by insurance.
I look at revenue and expenses revealed a troubling trend: the hospital that made a $2.4 million profit in 2015 on revenues of $6.13 million and salary and wages of $4.5 million, had lost nearly $2 million over 2016 and 2017.
Butler said Pecos County Memorial Hospital obtaining Critical Access status had a major impact on Iraan’s bottom line as “swing bed” patients – those moving from acute care beds to rehabilitation beds – were now able to do so in Fort Stockton, instead of Iraan.
Butler said is also found that, despite revenue falling to $3.9 million in 2016 and $4.5 million in 2017, expenses climbed to $5.18 million and $6.14 million, respectively.
“Those are huge red flags,” Butler said.
Digging in, Butler said he identified several challenges. The hospital had added a “Cadillac Plan” health plan for staff and retirees. Not only were the plans costing the hospital upwards of $2,500 per month per employee, but the generous, low-deductible plans would be subject to an additional tax in 2020 under the Affordable Care Act.
He also found that workers could amass unused sick time without a cap. One long-time employee was issued a $50,000 check for 1,800 hours of unused sick time. Another employee had more than 800 hours.
Housing made available to medical staff was applied unevenly, with some workers paying $550 per month and others as little as $50.
“You can’t have special deals for everybody,” he said. “It has to be a clear definition – that’s how things are run like a business. We have great care of our patients. We have very good quality health care here. But if you want to keep it, got to have some sense about it.”
Butler changed the health insurance, capped sick time and applied to same rent to all workers. He also reduced the workforce by 10 full-time positions – moves that were not popular with some current and retired employees. Some took to Facebook or local media to air their concern.
In an interview with CBS affiliate KOSA in Midland, 17-year hospital employee Susan Rasco complained about her rent going from $50 per month to $550.
"It’s going in day to day wondering if you’re gonna be the next one," she told the station.
Butler said the job cuts did not impact the level of care. In most cases, staffing levels had stayed the same despite a decline in the number of patients. The hospital employs about 54 people.
“One of the things I found about people upset – those expressing concerns – well, anger – not one said anything about patients or saving the district for the future. It was all about what was being taken away from me, me, me. That’s the wrong answer.”
Butler said he believes that the worst is behind the hospital and the staff.
“We ran a jobs program here instead of a business,” he said. “But it’s over. Hopefully we’ll just move on.”
For Butler, who has survived four bouts with cancer – including two brain cancers – the new job is a chance to do what he enjoys while helping a community keep its hospital.
“I enjoyed consulting coming in and cleaning up a hospital,” he said. “It stimulates my brain to do that. It takes a special person to do that.
“I enjoy the challenge. To be able to come into a small hospital that’s not broke, that has an opportunity to grow and has employees that are stable and good is a great situation.”