A review of Glen Rose Medical Center’s operations conducted by an outside company concluded that the facility is on a “good foundation” and suggested areas to improve, especially in managed care.

Consultants with Community Hospital Corporation who conducted the “desktop operational assessment” presented their findings recently to the Somervell County Hospital Authority Board. The board commissioned the review, which cost $9,500, from CHC to help it get a clearer picture of the medical center’s operations and its strengths and weaknesses.

Twelve professionals on the CHC team worked with the GRMC staff to collect data about the center’s finances, business office, supply chain and the contracted relationships with insurance companies – so-called “managed care” – so vital to hospitals’ operations these days.

“Glen Rose is on a good foundation,” Mike Bowers, CHC vice president of business development and hospital operations, told the board. “That speaks highly of the community to the management team to board members asking the right questions.”

 “The overall organization is doing well,” Bowers added. “There’s a great opportunity to define a legacy – where are we going to be two, five or 10 years from now?”

CHC used a stoplight format to present its findings. It gave the medical center “green lights” on its revenue cycle – namely billing — and insurance/risk areas.

“It’s great to see Glen Rose is in the green” in the billing cycle, Cindy Matthews, CHC senior vice president of marketing and strategic planning, told the board. “Kudos to the team and processing of paper side of health care. A lot of hospitals don’t do that very well.”

Receiving cautionary yellow lights were financial performance, supply chain, human resources, productivity and overall strategy. The only red light was for managed care.

CHC recommended that GRMC “maximize” its affiliation with Baylor Health System to help it reduce the costs of supplies.

Because GRMC is a “standalone facility” and not part of a chain, “it’s difficult to leverage the Cignas of the world, the Uniteds, even the Blue Crosses,” Matthews said, referring to large health care insurers that dominate the managed care market.

The size of local employers also comes into play, she noted. That multi-layered approach often puts small communities at a disadvantage when it comes to the cost of health care because they don’t have the negotiating power of cities with large employers.

For example, the four largest employers in the county have two insurance providers.

“Managed care begins to be a very big bubble,” Matthews said.

As of April 30, the hospital’s number of patients on Medicare surpassed those on managed care. Bad debts and charity care totaled almost $250,000. The medical center has been operating in the red, although it has cut its losses this year to $326,550, compared with $461,884 a year earlier.

Many hospitals, especially rural ones, are suffering, the consultants noted.

 “Ten to 18 percent of the hospitals in this country are going to die,” Matthews said. “Some are going to consolidate. So how do we become most effective at what we do?”

The board, management and medical staff need to ask themselves what their strategic direction is and whether the hospital wants  to partner with an organization, CHC added.

“It is unclear as to what the vision of the organization is,” Matthews said. “Where are we going as an organization?”

Board members and Gary Marks, GRMC’s chief executive officer, said the report was extremely helpful.

“This is a tool we can use to carry us farther,” Marks said.

 Hospital Authority Board meeting, board Chairman Larry Shaw said the medical center already has saved money by working to lower costs.

“We’ve already identified cost savings,” Shaw said. “We’ve probably more than paid for the money (spent on the review)– a good thing when all of us are hesitant to spend community money. We spent consulting money but we recomped it.”

The board also hired CHC to help conduct an all-day planning session on June 22.

Matthews said that the hospital's volume of outpatient surgery – a moneymaker for most hospitals – had fallen of because of the weak economy.

“Consumers are saying, ‘Look, if it’s elective surgery, I’m putting if off,’” Matthews told the board. “It gets put on the back burner.”

It was difficult to gather some data because of the hospital's computer systems.The medical center is in the process of evaluation IT vendors. This month it hopes to identify a lead vendor, Ray Reynolds, chief financial officer, said. Then it will negotiate and sign contracts.

The first round of federal stimulus money is available in March 2012 for hospitals that meet the Sept. 30, 2011 deadline to implement standardized electronic medical records by 2012.

That means the medical center must go ahead and purchase software and hardware this summer so it can install and troubleshoot the system, build interfaces and go “live” by next June. Reynolds estimated the software and hardware will cost about $2 million.