Byline: Carly Harrington
Apr. 27--Baptist Health System, working to identify ways to cut costs and improve finances, has found more than $15 million in savings and revenue that can help the ailing hospital operator.
CEO Janice James said Thursday the findings, which include a range of ways to reduce costs and enhance income, are part of initial reports conducted by Wellspring Partners, the management-consulting firm Baptist hired in February to manage daily operations and turn finances around.
While the overall assessment won't be complete until May, James said there is enough data already to show the health system can return to a positive cash flow position and profitability.
'The organization has been chewing through some of its cash this year, but we can definitely reverse that,' James said.
Some operational improvements identified include matching the right workload with the right employees, renegotiating purchasing contracts for supplies, and limiting outsourced services that have rates that aren't always competitive or beneficial to Baptist.
Managed care contracts, which James said were 'not competitive,' also offer opportunities.
'There's always improvements that you can make obviously in all these areas, but it's by no means a train wreck,' James said.
The health system already has begun implementing some recommendations in areas such as managed care, physician recruitment and joint ventures.
At Baptist's West campus, efforts are under way to make the operating room more efficient and increase volume.
James said she has approved 'significant capital expenditures' for instruments and other equipment that was keeping the hospital from doing more surgeries.
On Monday, Baptist plans to open the third floor of the West hospital, which has never been used because the volume wasn't there to support it, James said.
The floor will serve patients with injuries or illnesses related to orthopedics and neurology.
Most of the recommendations are to be implemented by year's end.
In March, James said the health system actually 'broke even.' Although there was a one-time prior-period cash adjustment, the results were encouraging and buy Baptist extra time to improve its financial condition.
James declined to provide specific financial data.
Last month, Moody's Investor Services downgraded Baptist's bonds on about $193 million of debt because of 'a continuation and sizable increase in operating losses' in fiscal 2006 and year-to-date fiscal 2007.
The losses totaled $17.9 million in 2006 and $16.2 million through the first seven months of fiscal 2007.
But James and her team are optimistic about Baptist's growth potential in Knoxville.
Baptist, she said, has a lot of positive factors working in its favor, including a strong culture, spirit and work ethic from the staff, physicians and the board.
A number of markets that James said she has worked in are 'very tough,' with declining populations and a weak industry base.
'That's not true of Knoxville. Knoxville is a fabulous market,' said James, who has worked in the health-care industry for 30 years. 'You've got growth. You've got a good industry base. You've got a good labor force. You've got this downtown development project that's wonderful.'
One of the biggest challenges James has had to face is the rumor mill, which she said 'works overtime.'
'It's just a very aggressive, competitive environment, more overtly aggressive than I've ever seen. There's lots of rumors,' James said.
In an effort to tackle rumors about Baptist and its future, James started the 'Rumor Cooler' blog to answer questions from employees and physicians. She also has held employee forums at its three campuses and met with members of the medical staff.
While some rumors are bothersome, James said she focuses on the task at hand.
'Right now, we need to get our house in order,' she said. 'That's what we're working on.'
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