Hospital feeling better

Still in the red, but a good prognosis

LACONIA — Cost-cutting measures by LRGHealthcare, including the controversial closure of a birthing center at Lakes Region General Hospital, have improved its financial picture, but it still lost millions this fiscal year.

Meanwhile, employees have received pay raises as the area’s biggest employer works to retain and recruit workers amid a tight labor market.

Chief Executive Officer Kevin Donovan said Wednesday he expects the nonprofit health care system, which has 1,000 employees, will break even in the new fiscal year that began this month.

Audited financial results are not yet available for the fiscal year that ended Sept. 30, and numbers can change, but losses could approach $5 million.

Donovan said LRGHealthcare lost $3.5 million in the first six months of the fiscal year. Cutbacks, including reduction of 15 administrative positions and consolidation of some medical practices, were announced in February.

Financials take time to turn around. There were necessary time lags in the implementation of the reductions, together with associated costs, including severance pay. A loss of $1.3 million occurred in the final six months of the fiscal year.

“We performed much stronger financially in the second half of the year,” Donovan said. “Right now, we are about at break-even for the organization, projected for this coming year.”

Projections for the new year take into account pay raises, some as high as 15 percent, which were announced to employees last week.

“We are making major investments in workforce, to pay them market rates, so we can remove the need for contract or temporary labor, which is very expensive,” Donovan said.

“If you break it down, 45 percent of employees will receive a 3 percent increase and 55 percent will receive increases from 7 percent to 15 percent.”

Those getting the biggest raises are in clinical, hard-to-fill positions, including nursing, lab techs and respiratory services.

An unemployment rate hovering below 3 percent means that the hospital must compete with many other businesses for workers in jobs such as housekeeping.

“When you can get a job anywhere in this economy, some would take a less strenuous job,” Donovan said. “But housekeeping is very important to us, for room turnover and efficiency. We want to make sure we can turn over rooms and clean those rooms in a way that is appropriate.”

Physicians, nurse practitioners and physician assistants are not included in the wage increase, but their provider contracts are being looked at based on productivity, quality and citizenship intangibles, such as participation in volunteer committees.

Donovan said the hardest decision in the cutbacks earlier this year was the determination to close the hospital’s longstanding labor and delivery center.

“We continue to get feedback on that, and it is totally understandable,” he said. “I can feel where they are coming from. We do know that, after much deliberation and consternation, it was an absolutely necessary decision to keep the entire organization afloat.”

The hospital was losing $1 million per year on the maternity center. The birth rate has been falling locally. Many of the women who gave birth in Laconia were on Medicaid, which pays for only a fraction of the costs of delivering babies.

Prenatal care continues to be provided locally and deliveries are now done at Concord Hospital, which is 45 minutes away.

An obstetrician remains on call in Laconia in case someone comes to the hospital and needs to give birth immediately, but that has happened only once since the birthing center closed. Mother and child did well.

A recent announcement noted that the hospital will be a regional “hub” in a statewide system to provide better care for those with drug dependency.

“We think of ourselves as an organization that invests resources where the need is the greatest,” Donovan said. “While the birth rate is dropping precipitously, the demand in the area of substance use disorder treatment is growing.”

The hospital is one of many across the country that have been struggling to deal with problems of uninsured patients or patients whose coverage pays for only a small part of actual medical expenses.

LRGHealthcare runs Lakes Region General Hospital and Franklin Regional Hospital, as well as a number of affiliated medical practices. Total services billed for 2017 came to more than $216 million.

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