ST. THOMAS- Members of the 32nd Legislature convened on Friday, for a Committee on Health, Hospitals, and Human Services meeting at the Earle B. Ottley Legislative Hall to discuss the current financial challenges of the Schneider Regional Medical Center.
Chaired by Sen. Nereida Rivera-O’Reilly, the meeting began with a testimony from Chief Executive Officer, Dr. Bernard Wheatley. Accompanied by District Governing Board Chairman, Cornel Williams, SRMC’s executive leadership team and medical staff, they outlined their challenges with a comprehensive breakdown of their overall costs, shortfalls and initiatives over the last several years. “The underlying issues are complex and include uncompensated care cost, our reimbursement structure, Medicare and Medicaid underfunding, decreased government appropriations and competition from outpatient surgical centers,” said Dr. Bernard Wheatley.
Significant reductions to SRMC’s appropriations negatively impact the goal of achieving a balanced operating budget. “If you already thought of every option, we should be seeing more progress on your end. I’m noticing a lack of traction here,” Sen. Rivera-O’Reilly expressed in response to comments during a round of questioning.
Schneider Regional’s operating deficit over the past 6 years averages $36,877,000 per year in losses before Government appropriation and $9,284,000 per year after Government appropriations and capital contributions. In December 2016, the total liabilities of SRMC amounts to $46,354,031. Accounts payable to SRMC’s vendors totals $34,981,000 as of 02/01/17, causing a critical situation in which vendors require immediate payment before providing supplies or services and resort to litigation to resolve past due payments.
The total estimated underfunding from uncompensated care for Medicaid and Medicare for FY 2016 is $27,679,160 (per draft cost report). After the local Government contribution of $22,472,518, the total underfunding mandated absorbed by SRMC is $5,206,642. The FY 2017 general fund appropriation of $22,472,518 and makes it difficult to render the full scope of services expected by the community and visitors, and impacts their ability to keep current with vendors.
SRMC’s commercial business has dropped 21% over the past two years. Significant numbers of revenue generating service lines, including orthopedics have migrated away from the hospital’s operating rooms to external surgical facilities. Since 2012, SRMC has seen a decrease of cash collections from this service line of $2,000,000 annually. The dramatic loss of this service line led to the suspension of the elective implants for hips and knees due to the organizations inability to purchase the implants.
Each year, SRMC has had to defer capital improvements or use operating funds to meet “emergency” capital needs. Unlike other similarly positioned hospitals, SRMC does not have the ability to “set aside” funds for regular capital improvements. “Deferred routine maintenance on many of our critical systems have a direct impact on our ability to provide quality healthcare to patients of our facility,” stated CEO Wheatley.
The deferred maintenance items include: Emergency generator repairs, elevator maintenance, fire alarm system, sprinkler repairs and domestic water system repairs. The significant infrastructure capital items include: a roofing system exhibiting signs of severe deterioration, leaking cisterns, and chiller replacement for the operating room. “It does not appear that what you shared with us today and your actions are aligned,” stated Sen. Rivera-O’Reilly.
As the umbrella entity of three facilities in the St. Thomas/St. John district, including the Myrah Keating Smith Community Health Center and the Charlotte Kimmelman Cancer Institute, their goal is to provide comprehensive, quality healthcare to the residents and visitors of the Virgin Islands.
Dr. Wheatley concluded his testimony requesting further consideration to increase the organization’s budgetary allotments to offset its operating loss and to fund depreciation. Based on the projected FY 2017 Operating Budget & Financial Trends, SRMC would need an additional $7.2 million of additional funding.