LRGH: More space than it needs, more debt than it wants

02 20 LRGH Maternity Colton Alternate

Justina Sawyer was born at Lakes Region General Hospital, as was her son, Colton, who was born on Friday. In fact, both she and her son were delivered by the same doctor. If she and her partner, Don Miller, have another child, they’ll have to go to Concord Hospital, as LRGHealthcare will close its Family Birthing Place as of May 30. See their story in Health & Wellness. (Adam Drapcho/Laconia Daily Sun)

LACONIA _ A decade ago, LRGHealthcare announced it would finance a $65 million project to build a 90,000-square-foot addition at Lakes Region General Hospital, make improvements at Franklin Regional Hospital and replace the Belknap Family Health Center in Meredith.
Now, the Laconia hospital finds itself with more space than it needs and more debt than it wants.
The nonprofit health care provider announced last week that labor and delivery services would end at Lakes Region General Hospital on May 30, operating rooms at Franklin would close, several of its other facilities in the region would be shuttered and 16 administrative positions would be cut.
There have been other cutbacks in recent years, including layoffs and the sale of buildings.
Like many medical institutions, Lakes Region General Hospital is struggling with the cost of providing expensive medical services to patients without health insurance or who are covered by Medicaid, which pays only a fraction of costs.
Significant debt
Chief Executive Officer Kevin W. Donovan said the hospital has close to twice the average debt of like-sized institutions. The U.S. Department of Housing and Urban Development insures $117 million of that debt and demands adequate financial performance to ensure repayment.
“Do we have space that is underutilized that I wish we didn't have? The answer to that is, 'Yes,'” Donovan said.
“A good example of that are the operating rooms in Franklin. They were used 33 percent of the time. They are absolutely beautiful. That was probably a multimillion-dollar investment that I'm sure made a lot of sense at the time, but as we look at it now, it is just space that we don't need.”

He also said the hospital industry has changed and procedures are increasingly being done on an outpatient basis, so the need for inpatient space has declined.

“Ten years ago, you'd be in the hospital for five to seven days for a hip replacement,” Donovan said. “Now you're out by the end of the day.

“A lot of the space that we have that is empty is just a factor of changing use rates and demographics.

“Yes, we have extra space. Yes, I wish we did not have as much extra space as we did. Yes, I wish we did not have as much debt as we have, but it's also my reality, so we're trying to deal with our reality as opposed to trying to question decisions made previously.”

Former CEO

Tom Clairmont, who retired in 2014 after 25 years as chief executive of LRGHealthcare, said debt is not as big a concern as it might seem.

“There's enough cash flow in the business to take care of the debt,” he said.

In its last yearly operating statement, the not-for-profit charitable trust showed $222.2 million in net operating revenue and about $5.5 million in costs for interest on outstanding debt.

“As a percentage of annual operating expenses, that's a little high-norm, but doable,” Clairmont said.

He also said such debt would not necessarily be an impediment to any potential sale of LRGHealthcare, should that ever be considered.

“The bigger issue with mergers is anti-trust,” he said. “If the other hospital is too close geographically, there are federal rules that don't allow this to happen.”

As an alternative to such mergers, hospitals often enter into relationships with other hospitals to handle certain procedures, Clairmont said.

LRGHealthcare will continue to offer prenatal and postnatal care, while labor and delivery will be done at Concord Hospital through a cooperative agreement.
The two hospitals have a similar agreement concerning emergency cardiac care.

Last April, LRGHealthcare, reported a $1.8 million operating loss in 2016, an improvement over the prior year loss of $11.3 million.
It lost about $2 million on operations from October of 2017 through January of this year.

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Pricey care

Humane Society explains high reimbursement costs in Great Dane case

WOLFEBORO — The New Hampshire state director of the Humane Society of the United States says that what might appear to be overbilling by the agency for the care of Great Danes seized from Christina Fay last June in fact barely covers the expenses that have been incurred.
Lindsay Hamrick, responding to an article in the Feb. 20 edition of the Laconia Daily Sun, said items such as “consultants and services” actually refers to people providing direct care to the animals.
Hamrick said there are five to six paid staffers at the shelters each day, including veterinary technicians, dog trainers, shelter managers, and other trained people, and more would be needed if not for the 12-14 volunteers who assist with the care of the dogs.
Tuesday’s article noted that the judge in the Fay animal cruelty case ordered her to pay $773,887 to the HSUS, but an itemized list of costs showed that only $154,375 went to the direct care of the dogs in the form of veterinary care, medical supplies, transportation and sheltering, and food.
Hamrick said the remainder of the money also went into the care of the seized dogs.
She said New Hampshire has 12 independent animal shelters that take in abused animals when possible, but they were unable to accommodate the 80 Great Danes seized from Wolfeboro.
“Even if they could take them in, they were not equipped to care for them for the eight months to three years it typically takes for an animal cruelty case to make its way through the courts,” Hamrick said. “That kind of a commitment for a nonprofit is an enormous one.”
The HSUS has an animal rescue team to deal specifically with large-scale animal cruelty cases and national disasters, she said, and has an operations plan and memoranda of understanding with law enforcement agencies to provide emergency services.
In the Great Dane case, the agency paid for the lease of three spaces and the shipping of the kennels and supplies, and had to staff the shelters, “so we essentially built three animal shelters over the course of a couple of weeks,” Hamrick said.
“The dogs are still in those spaces now, and even with the conviction and restitution order, none of that applies because of the appeals process. The Great Danes are still in temporary animal shelters — although they’re not so temporary now.”
While Fay asked the court to allow her to place the dogs in other homes, Hamrick said the state did not feel comfortable with that arrangement.
“The New Hampshire Legislature clearly found that the fact finder in the cruelty case was the best person to determine what is in the best interest of victimized animals — not the perpetrator,” attorneys for the state wrote in the sentencing memorandum.
Hamrick said the fees listed in the judgment reflect real costs, and would be much higher if many of the veterinarians did not provide services at reduced or no cost. She also noted that the listing does not include more than $100,000 in veterinary care paid from a separate HSUS fund established for the purpose.
“The travel costs are assessed because we brought people from all over the country to help,” Hamrick said, explaining that they use local volunteers from New Hampshire and New England as much as possible, but, in order to provide the staffing and care needed for that many dogs, they had to draw people from a wider area.
Animal cruelty bill
The Energy and Natural Resources Committee on Tuesday passed an amended version of Senate Bill 569, introduced by Senate Majority Leader Jeb Bradley (R-Wolfeboro), which requires people accused of animal cruelty to post a $2,000-per-animal bond to cover the cost of care.
The principal amendment was to increase from five to seven the number of breedable females to determine that dog owners must file as kennel operators. Opponents of the bill had complained that those who chose not to spay their dogs could be lumped into the category of breeders, even if they were only raising the dogs as pets. By increasing the number, legislators hoped to address the concerns of pet owners who are unlikely to have as many dogs.
To those who complain that the $2,000 bond is excessive, Hamrick said it is a reasonable payment for providing the care.
“If your dog gets loose, you have to pay a fee to get her back,” Hamrick said. “It’s that the shelter has provided care for your animal for however many days until you came to claim it. The state spends $300,000 to $500,000 per year on the care of animals seized, and only about 3 percent of that gets paid by defendants.”
The bond was included to relieve the burden on the towns, which are obligated by law to arrange for the care of seized animals, as well as to help the shelters providing the care.
“If towns are looking at a tremendous expense, it impacts how quickly they address animal cruelty,” Hamrick said.
She said the American Kennel Club and other groups that criticize such legislation offer no financial assistance or help to the agencies that rescue abused animals. “So it’s concerning about how they criticize how they’re cared for.”
More than 30 states have similar laws to require the accused to pay for the care of their animals, according to Hamrick.
“The Governor’s Commission has studied the issue of money and has said in reports that a bonding law is a huge portion of the solution,” she said.
Hamrick said there is a misconception about how easy it is to make a false accusation and seize animals.
“Law enforcement can only seize animals based on probable cause, and there must be a signed court warrant,” she pointed out.

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Bill to change Gunstock management deep-sixed

CONCORD — A bill that would have given the Belknap County Delegation greater authority over the management and operation of the county-owned Gunstock Mountain Resort has been sidelined for the current legislative session.
House Bill 1702 was deemed inexpedient to legislate by the House Municipal and County Government Committee Tuesday afternoon by a 13-0 vote with one abstention.
The bill would have transferred final authority over Gunstock’s budget to the delegation.
Control of Gunstock’s annual budget currently is exercised by the Gunstock Area Commission, a five-member body established by legislation in 1959 as an independent political entity, empowered to manage Gunstock’s operations. Its members are appointed by the delegation.
HB 1702 was introduced by Rep. Valerie Fraser (R-New Hampton) and co-sponsored by Rep. Ray Howard (R-Alton), Rep. John Plumer (R-Belmont) and Rep. Marc Abear (R-Meredith).
It was filed after negotiation sessions between the delegation and commission failed to produce an agreed upon formula for annual payments from the recreation area to the county, a so-called memorandum of understanding, which in recent years had amounted to $175,000 a year.
The bill would have required convention approval for the strategic and business plans along with the operating budget and capital investments proposed by the management of the resort and endorsed by the Gunstock Area Commission.
The commission went on record in opposition to the bill, which it said could endanger Gunstock’s ability to remain competitive in the ski and recreation markets.
The commissioners noted that the sponsors of the bill have repeatedly indicated that they aim “to extract as much money from Gunstock as possible to offset the county tax burden” and suggested that future investment in the resort be reduced or foregone so retained earnings can be applied against the county tax commitment. They warned that, if this approach were to prevail, “Gunstock will become antiquated and unable to adapt to the changing winter and summer recreational environment, and will not be able to maintain its competitive edge in the marketplace.”

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