Hospital board votes to engage Quorum
The board of directors of Marion County Hospital District No. 1, owners of St. Luke Hospital & Living Center, passed a resolution Thursday evening stating its intent to engage Quorum Health Resources as manager of the facility.
Quorum is based near Nashville, Tenn., and manages more than 200 hospitals in the United States.
Currently, Banner Health System, Fargo, N.D., manages the hospital, and is paid about $34,600 per month for doing so.
This fee pays for some operational expenses, some program support, and the salaries of St. Luke's chief financial officer Kevin Cronkleton and Sharon Zogelman, Cronkleton said Thursday.
IT (Information Technology) services also are included in that fee, Cronkleton said — including licensing and fees for software and hardware, technical support, and communication lines.
Liability insurance for the facility costs about $100,000 per year, and Banner also pays those premiums, Cronkleton said.
The $185,000 fee for the first year of management by Quorum does not include IT services, Doug Newman, St. Luke administrator, said. "That's a big chunk," he said.
New software and hardware will have to be bought. That cost is estimated at $350,000.
Quorum will have representatives at each monthly meeting of the hospital board, Newman said. "They have lots of experts on laws and regulations (affecting hospitals), and future, pending legislation. They will be a resource for the hospital to call on."
Newman also said employees won't be gone from Marion for training as much as they have been under Banner's management, since more of it will be doable here.
Board member Martin Tice said he did not completely understand "what we'll get for our $185,000."
Newman said officials and employees at those facilities managed by Quorum are very happy, to the best of his knowledge.
One benefit of having Quorum manage the facility will be membership in a large purchasing group. This will save St. Luke a lot of money, Newman and Cronkleton said.
Quorum wanted to know the board's decision by Sept. 30, and got it nearly three weeks before that date.
The initial agreement is for a five-year management term. Banner's agreement is to run the hospital and long-term care facility through Dec. 31, 2004, but it is willing to depart Marion sooner than that.
The possibility of having a professional consultant come in to handle the transition (between management companies) was discussed.
Board member Peggy Blackman was not in favor of hiring a consultant, nor was Newman.
Cronkleton said he felt that all Quorum would do in the transition was present a report, assembled, naturally, from its point of view.
He said the hospital has about $676,000 in assets at present, plus estate bequests worth about $500,000. He expects the hospital district to get about $420,000 in tax money on Jan. 1.
Information Technology is expected to cost $350,000. The fee for a transition leader will be about $50,000. Expenses for the first four months of 2004 will be about $1.8 million.
Liability insurance will cost $100,000 (for the year) and health insurance $160,000.
If Quorum assumes management by Jan. 1, 2004, the hospital will need about $2.5 million for the first four months of the year, Cronkleton said. So they are looking at a possible deficit of $863,000 for those first 120 days.
However, he said, the hospital may be able to get a grant to help with the IT system purchase.
Blackman said, "We need to get someone in here to write these sophisticated, complex grant proposals, and for the transition."
Newman and Cronkleton will be on Quorum's payroll, but it will still come off the hospital's bottom line, or net figure.
Board member Greg Bowers asked if the board felt it had done its due diligence on the Quorum matter. Board member Kevin Fruechting said it was enough, that any more discussion or information was not going to help him make up his mind.
Tice moved that the district enter into negotiations with Quorum to handle the transition duties, estimated to require several months.
Newman said the board was not making a final commitment, not irrevocably obligating itself, by passing Tice's motion and the Quorum resolution.
Cronkleton said there are some morale issues with hospital employees. Blackman suggested letting employees sit down with some Quorum officials to "see what's coming."
Officials also are to ask Quorum if it will help St. Luke with grant writing for $500,000 to $1 million.
It was announced there is space for one male in the living center.
Newman said there is a good chance that the hospital will receive a $25,000 anti-bio-terrorism grant to buy some equipment such as respirators, disposable suits for handling hazardous materials, and other items.
Newman said the federal government gave Kansas $15 million to fight bio-terrorism.
New hospital cookbooks are "at the printer's," he said. Funds from sales of the books will go to the living center.
