New London Hospital To Cut Jobs
Revenue Down $1.9 Million; Newport Project Postponed
New London — New London Hospital plans to cut staff and benefits and is holding off on building a new health center in Newport after running into budget problems.
Exactly how many people will lose their jobs, and in which departments, has yet to be determined, said Bruce King, New London’s CEO. But the hospital must trim its 600-person workforce to “right-size” the organization and make it financially viable, King said.
“Nothing is sacrosanct,” King said Thursday about which positions would be cut. “Overhead areas are actually being considered first, the non-revenue producing, but it’s across the house.”
New London will let some vacant positions go unfilled and has stopped recruiting to fill jobs for which it had budgeted, King said.
Still, some current employees will be affected.
New London’s fiscal year began Oct. 1. Through the first three months, patient volume was down more than 6 percent from the same period last year, and gross revenue was $1.9 million, or 7 percent, below budget, according to documents circulated to staff this month.
Declines were seen throughout the organization, from the emergency room to rehabilitation and lab tests.
At the same time, operating expenses were up by more than $500,000, much of it because of higher-than-expected health insurance costs for hospital employees, King said.
In a “letter to the community” published in the The Kearsarge Shopper on Wednesday, King and Board of Trustees Chairwoman Anne B. Holmes said the hospital would reduce benefits and the workforce, change staffing at the nursing home, delay implementing the electronic medical record system for outpatient practices until next year, halt spending on travel and education for staff, freeze spending on non-urgent capital projects and put the Newport Health Center project on “pause.”
“None of these steps are easy,” the letter said. “But to operate more efficiently with decreased expenses, they are necessary.”
Originally, New London had hoped to begin construction on a 28,000-square-foot health center in Newport this spring. King said he still intends to go forward with that effort, but is putting it on “pause.”
Newport has been an important part of New London’s service area — residents there account for one-third of the hospital’s business.
The two-story health center is supposed to replace a smaller clinic run by New London and would expand access to primary care in the community, which has been without a hospital for more than two decades and where options for care are limited.
Valley Regional Hospital in Claremont was not included in the “narrow network” of hospitals covered in the plans offered through New Hampshire’s online health insurance marketplace, part of the Affordable Care Act. New London Hospital and its doctors in Newport, however, have been included in the network designed by Anthem Blue Cross Blue Shield of New Hampshire.
Expected to cost around $7 million, the health center would offer improved infrastructure, have larger exam rooms and space for more providers.
New London was ready to bond for the project, but has decided to put it on hold for now.
“If your financials are weak, you don’t want to start borrowing and exacerbate a situation,” King said. “We had some concerns about our ability to meet our debt service. We’re not even sure the bank would be comfortable at this point seeing our financials.”
Nobody knows why patient volumes have declined, King said, but he pointed to a number of factors that may have influenced patients’ decisions. High-deductible insurance plans, rising competition from urgent care centers and an emphasis on wellness through the Affordable Care Act could have led to declining patient numbers at the hospital.
New London is not the only health care provider in the Upper Valley to have financial troubles amid declining patient numbers, reduced reimbursements from insurers and larger changes within the industry.
Valley Regional in Claremont is coming off a year in which it had a $1.6 million operating loss, and expects to have an even bigger loss this year.
Even hospitals that ended FY13 in the black, such as Alice Peck Day in Lebanon, are considering significant changes to be sustainable. For example, APD and Mt. Ascutney Hospital in Windsor are considering partnerships with Dartmouth-Hitchcock through formal affiliations similar to one that New London formed last year.
The arrangement gave Dartmouth-Hitchcock seats on New London’s board and control over some of the strategic decisions made at the small community hospital. The two hospitals have been exploring ways of pooling their resources to lower costs and coordinate patient care.
The affiliation with Dartmouth-Hitchcock did not cause financial hardships at New London, King said. In fact, it resulted in more patients staying in New London’s inpatient beds, as Dartmouth-Hitchcock Medical Center diverted patients with less-intense needs to New London in order to make room for more critical cases at DHMC.
When patients who were transferred to New London couldn’t afford to pay, Dartmouth-Hitchcock reimbursed New London for the costs, King said.
“It has nothing to do with the Dartmouth relationship,” King said. “If anything, the Dartmouth relationship has put volume in our beds and has been helpful in getting some savings and trying to get back on track.”
New London Hospital leaders have been talking with staff over the past month about what the financial problems will mean for the organization. Severance packages will be offered to workers who lose their jobs, King said, and more details on the cuts will be released in early March.
King said he hopes to keep services at the hospital intact.
“I’m trying to look hard at what we can do without changing program,” King said. “I don’t want to eliminate a service.”
Chris Fleisher can be reached at 603-727-3229 or firstname.lastname@example.org.