Since affiliating with Salina Regional Health Center in 2012, the Lindsborg Community Hospital has benefited in two major ways.
Memorial Health System of Abilene recently approved a Letter of Intent to affiliate with Salina Regional and is currently investigating the details.
Larry Van Der Wege, chief executive officer in Lindsborg, said there are other pieces, but the hospital has seen benefits in financial areas and clinical areas. Those are the two key pillars.
The Lindsborg hospital is owned by the Lindsborg Community Health Care Foundation which is made up of its donors. It is a private not for profit and a board of directors of the foundation is appointed.
Van Der Wage said the Salina Regional Board of Directors does not provide input in the operations in Lindsborg. While he said he works for Salina Regional and the chief executive officer Joel Phelps is his boss, “our experience is they have not been heavy handed, they have not micromanaged,” he said.
He said Salina Regional administration expects Van Der Wage to continue to run the Lindsborg hospital which he has done since 2008.
“On the financial side, one of the biggest pieces is cash flow,” Van Der Wege said. “I don’t know the financial situation of Memorial Health System. They seem to be pretty healthy and doing well, just from outside appearances.”
He said because of low volume of patient care, it’s been increasingly difficult for small hospitals to stay afloat.
While Van Der Wege didn’t say the Lindsborg hospital would have closed without the affiliation, he said, “I think it would be hard to see that we would be open in our current form. We would have needed help somehow, either greater tax support or with a different partner. It would have been every hard to continue to this point like we were, totally independent and not further tax supported.
“That is what you are seeing in communities across Kansas and across a large part of the United States with these small hospitals. It has taken a greater amount of tax support,” he said.
Being a critical access hospital, Medicare at once funded 101 percent of costs but because of sequestration it dropped to 99 percent of costs.
“You are not going to have any margin,” he said. “So one of the challenges is cash flow for small hospitals.”
He said in the relationship with Salina Regional, Lindsborg has been able to reduce expenses and be more efficient.
“I call it a bigger bat,” he said. “If you are trying to negotiate with insurance or with a vendor for a service and as a small hospital you don’t have many resources, you don’t have a very big bat.”
He said the operating agreement Lindsborg has with Salina Regional was for management and not ownership.
“With the arrangement, we don’t have to pay a fee to Salina Regional for that management of our operations,” he said.
Being affiliated with Salina Regional provides Lindsborg a no-interest line of credit.
“Prior to that if we wanted to purchase something, we either had to have the cash in the bank or we had to go to the bank and get lending, or max out our line of credit, and pay interest on that,” Van Der Wege said. “That has gone away because Salina is a successful organization and has a strong balance sheet. Prior to the affiliation we would sit down every week or two and decide what bills do we pay and what bills do we wait? Where are we at on our line of credit? That worry has gone away.”
He said he has told the board at Concordia, which also affiliated with Salina Regional and at Abilene, “That doesn’t mean it’s Christmas and that you can buy whatever you want. You still have to be a viable business.”
According to the Letter of Intent between Abilene and Salina Regional “...a positive account balance will belong to MHS and a negative account balance will be a debt obligation of MHS to SRHC.
However, Van Der Wege said the affiliation has been very successful.
“I think it has succeeded expectations as how it has worked,” he said.
He said before the affiliation some business decisions weren’t done because the hospital couldn’t take the chance.
“I likened it to you had one pitch and you had to hit it out of the park. You couldn’t foul it off or you could have trouble making payroll,” he said. “Or at least it was going to make things tighter financially.
“I think we had an 18-year-old freezer that needed repairs and wasn’t working right,” he said. “We actually debated, do we repair the 18-year-old freezer or do we replace it? The difference was going to several hundred dollars but that was enough cash flow--wise we had to discuss it.”
He said with Salina’s input, guidance and resources when needed, those business decisions can be made.
“And not be hamstrung based on the fear of cash flow,” he said. “For me, that has been huge. But we still have to be a viable business. It is not going to be Christmas. You are not going to get free money.”
He said the Lindsborg hospital has been able to add a half million in capital improvements a year, which it wasn’t able to do prior to the affiliation.
“I think Abilene is similar to us just reading the press releases. A majority of people in Lindsborg prior to the affiliation, when they needed a higher level of care, they would go to Salina. They wouldn’t go south. They went to Salina,” he said. “So to me, they are already self-selecting to go to Salina for specialty care so we are not asking them to do anything different.”
He said one of the big benefits when patients are transferred, if the specialist is in the Salina Regional system or going to the Salina hospital, it can be as efficient and coordinated as possible.”
He said patients don’t have to repeat a test or x-ray because that information would already be in the system.
The reverse equally works for a patient returning from Salina back to Lindsborg.
“It makes it that much more efficient and cost effective,” he said.
Contact Tim Horan at firstname.lastname@example.org.