Big cutbacks at LRGHealthcare

02 13 LRGH exterior

Lakes Region General Hospital has been facing financial difficulties for months. (Adam Drapcho/Laconia Daily Sun)

Babies will be delivered in Concord effective May 30, Franklin Regional Hospital to close operating rooms


LACONIA — Struggling with poor financial performance, LRGHealthcare announced a series of cost-cutting moves Tuesday, including an end to delivery of babies at Lakes Region General Hospital, effective May 30, closure of operating rooms at Franklin Regional Hospital and 16 layoffs.

Also closing will be the Moultonborough Family Practice, the Newfound Family Practice, Laconia Clinic Pediatrics and the Laconia Clinic Lab.

The health system's board said it was merging and consolidating facilities and programs to address “unexpected financial challenges that have emerged over the last couple of months.”

LRGHealthcare will continue to provide prenatal, postnatal, women's health and pediatric care, but babies will be delivered at Concord Hospital through a collaboration.

Board Chairman Scott Sullivan, who was born at the hospital, as were his children, said ending delivery services was an extremely difficult decision for the board.

“There were many of us that were born and raised in the community,” he said. “We didn’t make this lightly at all.”

People needing critical cardiac care already bypass Lakes Region General Hospital and receive care at Concord Hospital through a cooperative relationship, and Sullivan said baby deliveries will work the same way.

“We view this affiliation as an extension of what we already have with cardiac care,” he said.

“In the heyday, we wanted to provide all the services we potentially could in a community our size. Unfortunately, with the current environment we are in, those might not be possible going forward.

“We are seeing trends across the state and across the country that more and more hospitals are affiliating to gain scale. It might be appropriate for us to keep that in mind.”

Last month, LRGHealthcare said it was considering changes after light patient volume combined with low payments in October through December hurt financial performance. Updated financial figures were not provided Tuesday.

The not-for-profit organization had an operating loss of more than $1 million in October and November and was expecting further losses. Closure of labor and delivery services have been considered for months.

Kevin W. Donovan, president and chief executive officer of the health system, said the changes should improve finances by $7 million over a year's time.

“The changes being implemented by the Board of Directors are focused on maintaining patient’s access to care, as well as their access to their medical providers, and at the same time reducing the cost of maintaining the LRGHealthcare network,” he said.

“We want our patients to know that the high level of care they expect from LRGHealthcare will continue uninterrupted as we make this transition.”

He also said it was hard to make the choice to end labor and delivery services.

“Maternity care and delivering babies is one of the most rewarding things we do as a healthcare organization, so this was an extremely difficult decision for everyone,” he said. “However, to ensure the quality of care for our patients and address financial concerns associated with those services, it was a decision that we felt was right and ultimately inevitable.”

Donovan said that the hospital had 346 deliveries in 2015, 318 in 2016 and 283 in 2017, and the numbers were expected to continue to decline this year.

He said previously the hospital loses $2 million to $3 million a year on these services.

“The continued reduction in the number of deliveries not only presents financial challenges to providing access to the latest technology and ensuring quality care, but also presents challenges for recruiting and retaining physicians who require certain volumes to maintain skills and certification in rural areas,” Donovan said last month.

Medicaid pays for 60 percent of the program's births, which are declining locally amid an aging population and a preference by some women to have their babies elsewhere.

For a normal newborn, direct costs associated with the delivery of a baby amount to $10,700. Medicaid pays $2,250 of that total.

Also, LRGH sees more than double the state average of babies born with drug dependency, or neonatal abstinence syndrome, a condition that greatly increases costs for medical care.

Financial difficulties are being faced by small hospitals across the state and nation. A University of Minnesota study shows that more than half of rural counties in the U.S. have no hospital where women can give birth.

On Tuesday, the Alice Peck Day Memorial Hospital in Lebanon announced that Dartmouth-Hitchcock Medical Center would be handling its deliveries, effective July 15.

LRGHealthcare will cut 16 employees through the elimination of some administrative positions and program restructuring.

“We are profoundly aware of the impact our decisions have on the lives of our co-workers and their families, and we will make every effort to support all LRGHealthcare employees through these difficult changes,” said Donovan.

“We are fully committed to working with affected employees to minimize the effects of this change as much as possible.”

“Finally, it is proving close to impossible to attract providers to cover the services with a sustainable call frequency.”

The company has had financial challenges for several years.

In 2016, it recorded an operating loss of $1.8 million, an improvement over the prior-year loss of $11.3 million. In the 2017 fiscal year, which ended with Sept. 30, the organization was $1.5 million in the black on operations.

The finances seemed positive until light patient volume combined with low payments in October through the start of this year hurt the bottom line.

The U.S. Department of Housing and Urban Development, which insures $117 million in the company's debt, also has a hand in requiring positive financial operations.

In a news release, LRGH listed specific changes:

  • Moultonborough Family Practice will be closed, effective Friday, March 30. That practice is staffed by Carolyn Brown, APRN, and she will join Belknap Family Health – Meredith starting Monday, April 2. Richard Young, APRN, will no longer be affiliated with LRGHealthcare, as he joins HealthFirst.
  • Newfound Family Practice in Bristol will be closed, effective Friday, March 30. Dr. Peter Doane and Laurie Jorgenson, APRN, currently staff Newfound Family Practice, and they will continue to see patients starting April 2 as part of Westside Healthcare at Franklin Regional Hospital.
  • Laconia Clinic Pediatrics will be closed, effective Friday, March 30. The Laconia Clinic Board is working with LRGH to determine the future of the current providers.
  • Franklin Surgical Services and Operating Rooms will be closed, effective Friday, April 27. The closure will focus all of LRGHealthcare’s surgical services at Lakes Region General Hospital in Laconia and the Hillside Ambulatory Surgery Center in Gilford. Currently, Franklin Surgical Services provides only elective surgery, which will now be performed at the remaining LRGH sites.
  • Laconia Clinic Lab will be consolidated with the LRGH Lab, effective Wednesday, Feb. 28, but a blood draw station will remain. All test samples will be sent to LRGH for testing.

Staff writer Adam Drapcho contributed to this report.