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SCKMC Speaks About Hospital Consultant

June 24, 2016

The Arkansas City Commission voted this week to approve up to $175,000 for Quorum Health Resources to perform a financial and operations study for South Central Kansas Medical Center. The strategic, financial and operations evaluation is mandated through the construction bond for the new hospital.

The Arkansas City Commission voted this week to approve up to $175,000 for Quorum Health Resources to perform a financial and operations study for South Central Kansas Medical Center. The strategic, financial and operations evaluation is mandated through the construction bond for the new hospital.

“When the 2015 audit is finalized we will not meet our debt service requirements, as required by the debt covenants for the bond. Essentially what that means is we have to have enough bottom line to cover our debt payments which is a one to one ratio. We do not meet that because of the sizeable loss that we had in 2015. The covenants kick in and say we have to have a consulting group come in and analyze not only our financial situation but our situation as a whole,” said Holly Harper, SCKMC’s Chief Financial Officer.

Quorum will assess the hospital’s current status over a 90-day period and identify options to re-establish compliance with its bond covenants. The company is able to accomplish the assessment on a shortened timetable, compared to other studies, as a result of their ongoing relationship with SCKMC.

“They already have a lot of our information, not just financially but also how we operate. They have been in our hospital multiple times, know our faces, know our names, and have worked with them for over a year now. They are helping us in changing South Central Kansas Clinic into a rural health clinic, and they worked with us on our 340B pharmacy project. They are currently working with our purchasing manager to change group purchasing organization (GPO) to put us in a more robust GPO where we can get more savings and have access to more vendors,” Harper said.

Quorum vice president John Kaszuba expressed to the City’s Public Building Commission that although the timeframe may be reduced the study will be just as in-depth as with any other facility.

“This is the deep dive, where we’re pretty much going to turn the hospital upside-down — looking at the processes, financial pieces (and) operations,” Kaszuba said.

Quorum not only consults health care facilities but also manages a number across the county, including Coffeyville and Neosho here in Kansas.

“Because they do consulting as well as manage hospitals. We are going to look at the services lines that we are offering to see if the systems we are using are the proper systems, and if we are handling that in a way that is the most efficient and best practice from what they have seen within their own organizations,” said Virgil Watson, SCKMC’s Chief Executive Officer.

Watson emphasized that the study will compare best practices and may include the reassignment of some duties within the facility, but does not anticipate a reduction in staff.

“They are not going to come in and try to tell us that we need to get rid of people. It is very seldom that is the people who are the problem in these situations. We have good people. Our people are working hard and doing everything they can to try and do their part for making sure our operation works as efficiently and effectively as possible. But there may be different ways of doing what we are doing that could be more efficient.

Watson is looking forward to the study, and is confident that the end result will be positive for the hospital.

“I think this is going to be one of the best things that could have happened to SCKMC. I have my vision for what I think needs to be done but this will give us a detailed road map, prioritize the things that need to be done so that we know what can have the biggest impact for us as quickly as possible,” Watson said.