Saddled with huge losses in 2017 and not expecting a major increase in revenue for next year, management at Grays Harbor Community Hospital is focused on improved efficiency from employees to bring the hospital out of the red.

The hospital projects net losses of $3.59 million for 2017. A budget recently approved by the hospital district board predicts net income of just over $1 million for 2018. Several factors account for the positive projection, including an expectation of hiring fewer “travelling” nurses who make more money than those hired directly by the hospital. But the biggest factor, said hospital CEO Tom Jensen, will be a major emphasis on hospital workers improving productivity.

The hospital contracts with Truven Health Analytics, a company that collects productivity data from hospitals around the country and tells those hospitals how they measure up against the rest of the industry. When Community Hospital is measured against others, some departments are doing well, but others are doing poorly, Jensen said.

Productivity has been measured this way for 20 months and managers have been developing the standards and preaching efficiencies that long, Jensen said. “We didn’t see the results we thought we would.”

If departments can’t reach their productivity goals there could be a “change in leadership” in some cases, he said.

Toward the end of a session with local media on Thursday, Jensen said his own position would likely be at stake if the numbers don’t turn around.

Jensen said the staff just has to perform at average efficiency when measured against other hospitals. “If we can get to the middle, we should be able to break even, depending on reimbursement rates,” he said.

“We can’t keep throwing up numbers that are this red and survive,” Jensen said. The budget is predicated on efficiencies beginning from day one in the new year. Lowering unit costs for labor while offering the same services will mean the need for fewer employees, he said, and next year’s budget anticipates 22.5 fewer “full-time equivalent” employees. Jensen says that will come from fewer “agency” employees such as the travelling nurses, and from less overtime. The budget for agency employees is projected to drop from $3.9 million this year, to $1.4 million in 2018.

Seven employees were recently laid off as the hospital outsources billing functions. Those don’t count in the 22.5 FTE reduction for next year.

Two months ago the hospital announced that it would cap overnight stays to 49 beds, which, if the federal government approves, would increase the amount the government reimburses the hospital district for care by primary doctors at clinics the hospital operates. The cap goes into effect at the first of the year, but the higher payments won’t start until 2019 (and would be retroactive to Jan. 1, 2018) and aren’t included in the coming year’s budget.

Eventually, it could mean up to $3 million more in annual revenue, Jensen has said. Right now, the hospital typically loses money from the primary care it provides through clinics, Jensen said, because so many of the patients have Medicaid or Medicare insurance and reimbursement rates don’t cover what it costs the hospital district to provide treatment.

Labor efficiency is one of the few things the hospital can control, Jensen said. “There’s nothing we can do about our payer mix, we can’t change who we serve or the drug costs.”

Staff morale problems have been an issue in the past and Jensen acknowledged that it will be a sensitive balancing act to ask employees to do more. “No one likes to hear they have to work harder, but everyone understands,” he said.