Athol Hospital Makes Layoffs, Continues Negotiations
After two quarters in the red, Athol Memorial Hospital has laid off nine people, cut the hours of another 18 and reduced other expenses.
President and CEO Steven Penka said the cuts reduced the hospital’s $23 million budget by $1.6 million. Penka said that before the last quarter of 2009, the hospital had been in the black since 1999. He said the recession is responsible for some of the decline in revenue, with patients less likely to seek elective procedures and more likely to delay treatment for non-urgent health problems. He said reduced Medicaid reimbursements have also taken a toll.
“All hospitals have taken these Medicaid cuts,” he said. “But a larger hospital with a little more margin can deal with it a little more easily.”
Penka said the hospital spread the cuts across its departments and that only one clinical worker, a part-time nurse, was laid off.
Future Partnerships
The hospital is in discussions with Vanguard Health Systems, the parent company of Saint Vincent Hospital in Worcester and MetroWest Medical Center in Framingham and Natick, over a possible affiliation. Penka said requirements like a new state law that demands hospitals adopt electronic medical records by 2015 are difficult for small hospitals. He said he believes the 25-bed hospital is capable of handling these challenges, but the resources of a larger corporation would make it much easier.
“I sure would feel a lot more comfortable about making that deadline if we had that backup,” Penka said.
Penka said both Athol Memorial and Vanguard are very interested in the possible deal, but negotiations have gone more slowly than he had originally hoped, in part because of the hospital’s financial difficulties. He said meetings between the two parties are still happening regularly.
Penka said the hospital has had to make course corrections before in response to the kind of financial difficulties that plague many small hospitals. In 2005, the Centers for Medicare & Medicaid Services named Athol Memorial a “critical access” hospital, making it eligible for higher reimbursement levels. Critical access status is intended to keep hospitals in rural areas viable for communities that might otherwise not have a local medical center.
Yet Penka said Athol Memorial’s long-term survival is not guaranteed. He said that over the past 20 years thousands of hospitals have closed across the country.
“It is very possible that unless we make changes to meet the environment that we would be one of the hospitals on that long list,” he said.
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