Carl Gerlach, CEO
The stimulus is working – for Sonoma Valley Hospital!
Thanks to a major, low-cost loan from the California Energy Commission, Sonoma Valley Hospital is going green!
I’m delighted to report that we have just been approved for a loan of nearly $2 million in stimulus funds from the California Energy Commission. This low-cost, one percent interest loan, together with a $174,628 rebate from PG&E, will enable SVH to make important energy upgrades, reduce our energy costs and greenhouse emissions, and with a projected annual savings of $175,000, pay back the loan in its entirety within 12 years.
This is wonderful news. And it’s a perfect demonstration our team’s unflagging efforts to get the best bang for the buck for the taxpayers of this community while bring our hospital up to par. Just to put this in perspective, let’s look back a few years. You probably remember that a while back, there was a plan to spend somewhere in the neighborhood of $250 million to build a new hospital, which the community did not support. Our team learned that by listening to the community, we could come up with a better plan and we worked to prove that we could do the necessary upgrades right here on this campus.
We knew it wouldn’t be easy, but it was the right thing for the community, the environment and our economy. In the fall of 2008, we offered a moderate bond measure of $35,000, and pledged to work within it. The community supported us. Then, with Ratcliff, our architect and Jtech, our project manager, along with our Facility Advisory Committee, we worked to figure out actually how to make the upgrade happen, and to show how we could really use this site on into the future.
Simultaneously, our legislative team, with Norman Gilroy, worked tirelessly to help get legislation passed so that we could use the design-build method, which would mean that whatever we built would be approximately one third less expensive. Now, with this CEC loan – which Norman, himself, has pursued for months, researching incentive programs and technologies, arranging for audits of the hospital’s energy usage and gathering options for the hospital’s energy plan – we’ve augmented the GO bond money with almost $2 million, which we can pay back with our own energy savings.
As currently planned, the money will be used in three areas: 1) to cover lighting improvements such as replacement of lamps and ballasts, LED retrofits to interior lights, surgical lights and exterior lighting, and installing lighting occupancy sensors; 2) to cover IT upgrades, including improvements such as replacement of 150 desktop PCs with a virtual networked desktop system; 3) to pay for building improvements such as upgrading air handlers and replacing windows.
Our next step is to get our design-build team in place so we can finalize our design and begin the actual work of the renovation. Some have asked me, “Haven’t you picked a design-build firm yet?” I assure them, that however lengthy the process, the result will be in direct proportion to the care taken in planning. We want to measure 10 times, and cut once!
What about the design-build team?
So far, we have been working with three teams, who have put in an average of 3,000 hours each to come down to a final design. They have all managed to refine the master plan we unveiled a few months ago, and are saving us a huge amount of money with a few critical modifications. We are very excited with the creativity of their problem solving and the hard and expert work of each of the three companies. Our decision on which firm to choose will be based on their ideas, their cost, and their demonstrated ability to get the job done.
The Facility Advisory Committee is going to make their decision this week. However, in the state of California, the process one has to go through to grant a contract of this size is intricate and the legislation that enabled us to do design-build didn’t get us off the hook for following all the other state bidding requirements. So, although we may be all ready to go, we may still have loops to jump through before we are ready to bring the matter to the board. But we will work through it, and we’ll keep you posted.
Meanwhile, our thanks go out to our whole team, especially Norman Gilroy for helping to make this loan happen, and to his fellow Facilities Advisory Committee team-mate, Peter Hohorst, for all their fine and constant work on behalf of Sonoma Valley Hospital and the community we serve.
Carl Gerlach, CEO
February 23, 2010
MRI purchase will expand our capability to deliver quality healthcare – close to home
The spirit of Sonoma Valley Hospital is strong. Our dedication to our mission – to improve the health of all the community – is healthy. You can see it expressed on a daily basis if you visit family or dear ones who are in our care; you can see it in the works of the Foundation and also generous individual donors, such as those former patients who are so grateful for the care they’ve received here they are about to refurbish the Skilled Nursing Facility. You can see it even in board meetings, in the presentations and decisions made to enable SVH to better serve the community.
For example, in this month's board meeting, our CFO, Tim Noakes, and Imaging department manager, Jackie Lyons, requested that the board approve the purchase of a new MRI system to replace the leased unit that’s parked out front two days a week, and whose contract, with Alliance MRI, terminates this March. Weighing costs and benefits of purchase vs. continued leasing, Noakes recommended, and the board unanimously approved, purchasing the system. “It’s a huge opportunity for our community, at a lower cost.”
Here’s why it’s important. SVH has provided MRI services for our community since 1992, on a part time basis. SVH will be able to offer the community full-time, Monday through Friday MRI services, and, in the future, possibly weekends, too. For our doctors, this means that if someone comes in with an emergency, perhaps with stroke symptoms, they can order an instant MRI, right here on site. They do not have to check and see whether the emergency happens to have fallen on one of the two days the van is here.
For our staff, the advantage is stability. While the leasing company uses their own technicians, we will be able to train and use our own X-ray/CT techs. Jackie Lyons, Medical Imaging manager, told the board that her group will cross-train SVH CT technologists to fill the new MRI needs. The exams will be read by our local radiologists and their colleagues from National Orthopedic Imaging Associates. This group reads for U.S. Olympic and other sports teams, and shares opinions internationally – so we can ensure the most accurate readings.
Finally, the cost to operate our purchased unit will actually be less per month than our current mobile contract fee. In short, this is a good deal for us, and a good deal for Sonoma Valley.
Carl Gerlach
February 11, 2010
"Hospital responds to Cohen" Index Tribune
Last week, in an Index Tribune Op Ed, former city councilmember Stanley Cohen offered his critique of our situation. The inaccuracies and misunderstandings of his statement were such that I found it important to take time away from the work at hand to respond. In case you missed my response in Friday's paper, I'll re-state it here.
The root cause of the recent financial crisis is the loss we suffered after two physicians redirected a significant number of procedures to other facilities --- in which they are investors. Although these physicians promised to continue to serve all Sonoma residents at SVH, the number of cases they redirected out of the Valley was far greater than they represented to us. As a result, we experienced a drastic decline in outpatient service revenue. Our doctor recruiting effort has been directed toward restoring this surgical volume. Added to that, our cash flow problem was exacerbated by the State’s failing to pay almost $400,000 currently due to SVH.
The market share data for Sonoma residents clearly demonstrates that there is sufficient demand for hospital services to support a viable hospital and recruitment of these new physicians. In past years it is true, we have lost too many of the physicians we recruited. We have studied the reasons for the failures; we have learned our lessons. We have established a business relationship with the Prima Medical Group, a Sonoma/Marin doctors’ organization. This group is our vehicle for recruiting all new physicians. In addition to providing recruiting help, Prima provides electronic medical record support for all of the doctors recruited.
As a result our doctor recruiting effort in the last year has been hugely successful. In recent months, we have recruited two new female family practice physicians, a half-time general surgeon and a new orthopedic surgeon. We have brought into SVH the services of vascular surgeons, pain management specialists, and a new anesthesiology group. Although increasing revenues is imperative, we have found significant opportunities to improve our efficiency and reduce costs. When challenged with the revenue problems this fall, the hospital managers responded by developing plans to tighten operating costs. We are now implementing these plans.
As part of the facility Master Plan --- which is required to support any facility upgrade plans --- we are completing a “Business Plan.” I have been describing the purpose and form of this plan for almost a year in meetings of the Board of Directors. In brief, this plan will include several forecasts of the hospital’s financial situation and will answer the never-before-answered question of what services are clinically and financially feasible. This Business Plan has been in process since last spring, has engaged members of the medical staff, and constitutes what Mr. Cohen calls a “review of potential actions that may save the hospital.”
Finally, Mr. Cohen's suggesting that “closing the ER” as a solution is almost too silly to comment on. We know that this ER is essential to this community. Ask anyone. If you want hard figures, ask us, or look for them here. We'll keep you posted. So, call us. Read the newspapers. Follow us here. We are doing our best to be “transparent,” and welcome genuine inquiries.
Carl Gerlach
January 22,2010
Turning the Page
For me, the time is approaching to turn another kind of page. This year, the “turn-around” work I came here to do will move into the stage where the crucial decisions will have been made and the master planning will have been done. I am starting to look toward that time when I can hand over the reins to others and return to my consulting career.
Accordingly, the board has announced that they have extended my contract through June 30 of this year. Until then, I will be working to resolve our urgent financial problems, finish our Business and Facilities Plan, hire a contractor to do our facility upgrades and, vitally important, continue to oversee the recruitment of new physicians.
I am proud of the progress we have made over the past year. We have a great team working on our facilities renovation planning. We have a great new set of doctors and we are building a first rate surgical team. We’re building strong associations with other medical institutions that will help save money and expand our healthcare services for our community. Financially, we’re in a crisis, but we are taking the right, positive steps. We’re looking our situation straight in the eye and we are dealing with it. I’m pleased to say that our staff and employees, the people I meet in the halls, seem supportive and understanding. Their response has been gratifying.
And always, the response from the community is gratifying. I hear wonderful stories about this hospital every day. Some are about lives saved thanks to dramatic ER team skills. And some are just stories of simple gratitude for our kindness and competence. Just last week, I heard from our mayor, Ken Brown, who came to the ER on a busy Friday night with his little daughter who had a scary but non-life-threatening wound in her foot. He said that though the ER was in full emergency mode, with people pouring in and being treated, they were treated with memorable care and competence.
Occasionally a story surprises me. A friend told me the other day that she’d stopped by her doctor’s to ask what shots she’d need for her overseas trip. He kindly told her what she’d need, and where – in Santa Rosa – to get them. “Santa Rosa!” she cried. “But I happen to know they offer those shots right here at Sonoma Valley Hospital!”
What other services that we provide have people forgotten? If you’re reading this as an e-blast, I suggest you visit our website. Tour around. If you’re reading this on my blog, do the same. Tour around. Meet our people. We’re here. We’re good. And when we say we offer “Quality Care Close to Home,” we mean just that.
Happy New Year!
Carl Gerlach
On further cut-backs
Two weeks ago, we initiated furloughs and took other actions to deal with our short term cash flow problem. And now, as we indicated at that time that we would, we are continuing to implement other initiatives to reduce costs and increase revenues. Our objective in doing so is clear: the survival of SVH and the continued provision of high quality service to our patients and community.
Last week we took further actions, many of which will materialize in the first couple of weeks in January. These include an across the board reduction in compensation of five percent for all non-furloughed employees and implementation of virtually all of the proposals developed by department managers.
The need for this immediate action is dictated by a critical and realistic assessment of the time frame in which our revenues are likely to increase. While we are optimistic and have a great deal of work in process that will increase our services to the community and therefore our revenues, we must reduce our costs now.
It is our intention and understanding that the sooner we act, the sooner we can rescind the furloughs and salary reductions.
Here is a review of our situation and the actions we’re taking:
Cash reserves are very low, and negative cash flow from operations threatens the survival of SVH.
Specific causes:
• Lower than expected revenues from Special Procedures --- impact: ($540,000 annual)
• Delays by Medi-Cal in reimbursing amounts withheld in July --- impact: ($390,000 one-time)
• Shorter lengths of stay in the SNF --- impact: ($620,000 annual
• Greater expenditures for anesthesiology services --- impact: ($ 1,085,000 annual)
• Although surgical procedure volumes have increased in recent months and there has been recent success in recruiting new MDs to SVH, the full impact of this recruiting will not produce significant increases in revenues until after April 2010
• Although some of the recent recommendations from department managers could provide some remedy in the short term, many will take several months to do so
The actions we’re taking:
•
Beginning with the pay period running from 12/13 through 12/27, we will be furloughing people who are not providing direct services to our patients, providing support to our customers, engaged in critical actions to increase revenues, or ensuring proper and timely collection for billed services.
• The furloughs will remain in effect for a 90-day period, and the need will be reassessed during that period.
• All administration staff will be reducing their time by 20%.
• The time reductions for other staff will range between 10-20%.
• Insurance benefits will be maintained at current levels.
• We will continue to work to develop other initiatives to reduce costs and increase revenues--- to implement the many recommendations provided by department managers.
I am sorry that we must impose this cost-cutting measure on our valuable employees and that we must announce it during the holiday season. There is no good time for difficult news. But the faster that we can execute concrete measurable remedies, the faster we can terminate the furloughsBut by all pulling together, we can hopefully ensure the survival of the hospital.
Carl Gerlach
On furloughs and wake up calls
“Smoker has shortness of breath; doesn’t pay attention. Smoker has chest pains; doesn’t pay attention. Smoker has heart attack and goes to the ER; still doesn’t pay attention. Smoker has to have by-pass surgery–now pays attention. He has to. Or else. And that’s where we are.”
This is how I described our situation at the holiday party last Friday night, the day after I’d announced furloughs of all employees not directly involved in patient care. I was surprised at the response. People got it. Several people came up to me and said, “Wow, that’s the first time I’ve heard you use an analogy that wasn’t a sports analogy.” But it’s where we are now. And we have to get used to talking about it.
We have to cut expenses to meet our revenue. Plain and simple. It’s not pretty. But that’s where we are. We’re doing everything we can to achieve financial balance. Our department managers have been working hard to trim expenses and increase revenues, and we will see the results of their efforts within months. At the same time, we’re working to enhance and expand our services so that we can better fulfill our mission to our community so we can achieve sustainable financial balance.
Already, we have a great new general surgeon, Dr. Crystine Lee. She has incredible credentials, and she loves Sonoma. We’re lucky. Now Dr. Mala Singh has come to join Dr. Sebastian’s family practice. She, too, is superb. We’re very lucky. And there are others getting ready to join our community. So our prospects are positive.
And remember, we’re not alone in this. District hospitals all across the state are struggling. The State is struggling. Families are struggling all across the country. We will eliminate the furloughs as soon as possible, but realistically, we do not expect significant revenue increases until mid-2010. Meanwhile, as I’ve said in my letter to all our employees, in order to maintain our truly wonderful services to our patients, we’ll need all of your cooperation and patience. As always, we thank you for all you do.
Carl Gerlach
Looking to a new relationship with Prima Medical Foundation
It has long been clear to me that for Sonoma Valley Hospital to fulfill its mission to care for the health of everyone in this community we to expand our physician base. With an integrated group of new primary care physicians and surgeons, we will be able to improve and increase our array of services so that our community can enjoy the finest of healthcare without needing to drive long distances. We want to be able to say, for all of your general healthcare needs, “Choose us. We’re good. And we’re here for you.”
To get to that place, to recruit – and to retain – the physicians we need to fully serve our community, has so far been challenging. We now have a plan to change that.
For over a year I, along with SVHCD board chair Bill Boerum and board member Peter Hohorst, have met with Marin Individual Practice Association and their subsidiary, Prima Medical Group, and others to develop a collaborative plan that would serve Sonoma Valley and Marin healthcare districts. Both districts have an acute need for new primary care physicians as well as specialists, and most new doctors can’t afford to enter our expensive communities and set up individual practices. So the idea is that an organization which offers them collegiality, support and benefits, much the way a Kaiser or Sutter organization operates, but also allows for the independence which people gravitating to small towns tend to desire, would be a viable answer for doctors, our two hospitals and our patients as well.
At their December meeting, following our Finance Committee’s approval, our SVHCD Board of Directors took a decisive step toward achieving that goal, voting unanimously to invest $100,000 toward creating a business and legal plan for a proposed Prima Medical Foundation. The investment does not bind SVCHD to the foundation, but supports this planning phase. As proposed, the foundation will be co-sponsored, along with SVHCD, by Marin Independent Physicians Association, Marin Healthcare District and Marin Medical Practice Concepts.
As I said at the board meeting, it will take time and a great deal of care to get this plan right. But we know what is needed and we are committed to this as the way of the future for healthcare in small communities such as ours. As Dr. J Nevin Smith, who worked on this concept as a member of the Strategic Planning Committee, said, “For 20 years, we’ve been trying to put together just what you’re talking about – if you don’t take it, where else are you going to go? I don’t think you have too many choices.”
I congratulate the Board and think this is good news and I feel optimistic in the direction we are moving.
Carl Gerlach
Our Master Plan Unveiled
After months in planning, we are happy to show you our Master Plan for the Sonoma Valley Hospital upgrade, retrofit and general refurbishment.
The new plans, made possible by the passage of the Bond Measure last November, feature a brand new Emergency Department, a whole new separate entrance for the Ambulatory Services center, a new cafeteria and café and of course, all the invisible engineering upgrades we are required and advised to do.
Our primary challenge was to satisfy our earthquake retrofit requirements while guaranteeing the continued emergency services our community so depends on. We also had other challenges including to provide a safe and upgraded central utility plant. Currently, both reside in the Central Wing of the hospital – the wing that is non-earthquake compliant. To make it so would have required removing the entire roof and installing structural braces – a highly tricky, if not impossible, thing to accomplish with seriously ill patients on the floor.
The solution our architects have come up with is to build, in the area now devoted to parking, a brand new addition, facing Fourth Street, that will house a new Emergency Department, a new Central Utility Plant and a new kitchen, cafeteria and café. On the Andrieux Street side, there will be a new, separate, “non-hospital” entrance to the Ambulatory Services department, which will also be refurbished, so patients can enter and be treated without feeling they’re going to the hospital.
In the interests of improving our environmental footprint, not to mention keeping down our expenses, we are exploring ways to reduce our energy consumption by employing a combination of solar and fuel cell technology.
All of these improvements, as well as the non-visible engineering improvements, should make our hospital quite attractive to doctors, nurses and patients as well. These improvements will make working here more efficient and being here more pleasant and they will enhance our ability to provide our community with quality healthcare – close to home.
Carl Gerlach, CEO
October 8, 2009
