I can honestly say that 2014 was the most challenging year in my career.
When I did my residency for my MHA in 1991, I remember being told that the “good old days” when insurance payments covered the cost for most patients using the hospital were over. There were many new approaches emerging such as “capitation” (or being paid a flat fee each month to manage a patient’s health care, rather than being paid when care is provided.) We started to discuss how hospitals would be in partnership with physicians and health plans, and our focus would be to keep our “population” (assigned patients) healthy.
Now, 23 years later, the predicted changes are here. We began to experience them in mid-2013, and they truly arrived at SVH this year. As we were opening our beautiful new wing, SVH was also faced with figuring out how to survive on millions of dollars in reduced reimbursement from Medicare, and also handle a growing number of Medi-Cal patients.
What are we starting to do? We are entering into more agreements with other hospitals, health plans and physicians with the aligned incentive to “Keep our Sonoma Valley assigned patients healthy.”
In March of 2014, the Affordable Care achieved the goal of expanding access to health care, but it resulted in our Hospital’s Medi-Cal patient population going from 5 percent to more than 15 percent. What does that mean for SVH? We are paid significantly less than our costs for these patients even as more patients are covered by this type of insurance. So we had to become even more efficient and improve our margins.
We just published our annual report for 2014 and in it you will see that we ended the fiscal year with a loss, but when you figure the depreciation cost (which is not cash, as most realize), we had an extra $1 million in cash to pay for capital expenses and other costs. I can honestly say that I’m extremely proud of what we accomplished this year. If we did not have the support of our community, physicians, staff and strong leadership from the board and managers, we would have been extremely hard pressed financially this year.
We have weathered significant financial changes, not to mention an earthquake and an Ebola alert this year. We also saw the closure of Palm Drive Hospital, which caused us to unravel some of our shared services. And seeing a partner hospital close was eye opening. Now we have great reason to be optimistic about our future.
We continue to thrive in the areas of quality and safety. We won four major quality awards and were named one of the top 15 safest hospitals in the nation this year. We are thriving in service excellence with extremely high patient satisfaction scores.
When I think about 2014, I think of “growth” and am pleased with all that we have learned and overcome this year. The one thing that I have to say is that the love so many of us have for Sonoma and for Sonoma Valley Hospital was evident in 2014. We did what was needed to continue to thrive and it is a pleasure to serve as the CEO of this great organization. I hope you join me in celebrating and please include SVH in your toasts for a great 2015!
In good health,
President and Chief Executive Officer
Sonoma Valley Hospital