Could you talk about labor issues for a hospital like Evergreen.
We’re a public district hospital with 275 licensed beds and 15 skilled nursing beds. We employ about 140 physicians, and we have roughly 3,200 employees total. CFOs are always focused on money. Labor and benefits make up about 60 percent of our total operating expenses. So we look closely at staffing ratios and staffing productivity. Because a large proportion of our labor force are nurses, we often look at the cost of hiring agency nurses and how that would impact the organization. Another big area of concern is the use of overtime. All the extra pay for shift differential and on-call service is important to a CFO. And scheduling is also a major concern. We want to know how effective we are at scheduling, so we’re not doing too much overlapping.
What’s your payer mix?
Most of our patients are commercial. Our biggest payer is Primera, which is a Microsoft health insurer. We have very little Medicare as a result. So it’s roughly 30 percent Medicare, 8 percent Medicaid and the rest are commercial.
Has the recession had a particular impact on labor costs?
If anything, hospitals are holding the line on labor costs because nobody can afford to give raises. That’s happened in many areas, except where we have labor contracts. We’re obligated to honor the contracts and we do. We didn’t lay off anyone last year. We wanted to make sure we could address the downturn in our volumes. Our volumes were soft last year. We did have more scrutiny in hiring. For instance, our management team has usually been allowed to replace people automatically. What we did last year was have our committee that reviews all new FTEs look at replacement FTEs as well, to make sure that we really needed to replace an FTE.
Do you anticipate that 2010 will be better financially for hospitals?
I still think it’s going to be a tough year for hospitals. In January of this year we didn’t see much improvement. Our volumes are still very soft, admissions are down, surgeries are minimal. We saw that all last year. Where the hospitals get hit hard is when the patients who come in can’t pay their bills. People still get sick and need surgeries, but last year more people than we ever expected couldn’t pay their bills. When people get back to work, and get health insurance, then the hospitals will see an improvement. Last year, we had a lot of requests from patients to write off bills because their COBRA coverage ended. We’ve planned for bad debt and charity care to increase in 2010.