RMC trustee questions IT contract
By GENE ZALESKI, T&D Staff Writer Sunday, August 31, 2008In a call for full disclosure and financial responsibility, a Regional Medical Center trustee on Tuesday questioned the hospital’s selection of an information technology company earlier this year.
Hospital officials say the contract given to Missouri-based Cerner Corp. in April was brought before the entire board for a vote. Trustees decided the Cerner contract was the best option for the hospital’s needs, officials say.
But trustee Danny Covington said the Cerner bid was not the lowest the hospital received.
Cerner was contracted to provide an integrated system for the hospital’s IT functions to create a seamless information database and less chance for system malfunction.
Covington said the bid by Massachusetts-based Meditech Information Technology, afterdiscounts, was about $4.5 million compared to the Cerner bid of about $12 million.
“I don’t believe we got the low bid, folks,” Covington said, expressing his concern that the board was not presented with all the information it needed to make an educated decision.
But Marilyn Tremblay, RMC chief information officer, said the two bids were brought before the entire board in a slide presentation.
Tremblay said the $4.5 million Meditech price was a base price. The Meditech bid would have had other costs, including system implementation.
“In the end, there was a $200,000 difference between the total cost for Meditech project for five years and the Cerner project for five years,” she said. “The Cerner project was the lower number.”
Hospital officials say the final cost for the Cerner Corp. contract over a five-year period was $11.9million and Meditech was $12.1 million.
The five-year total cost of the project was $15.8 million. Tremblay noted the board also decided to purchase a redundant system to ensure data backup.
Covington said his research of the two products revealed that Meditech would be more appropriate for the RMC and that a redundant system is “foolish.”
“They tell me that nobody has ever put a redundant system in,” he said. “They say it takes a 100-year tsunami to hit the East Coast for what we need in a redundant system. I just don’t believe it is the right fit for us in the first place.”
Other trustees questioned why Covington brought up an issue already decided by the board.
“We already voted on this one time. Why are we going back to this?” trustee Milton Dufford said.
In April, trustees voted 8 to 4, with one abstention, for the contract with Cerner.
Trustee Athaniel Badger agreed with Dufford, noting the project was approved with the information presented.
“Those of us who did not take the plane trip out there may not have all the information,” Covington said.
Some of the trustees have expressed concerns about not being informed of a trip to Missouri to view the technology. Dufford said about three members of the board went to view the technology.
“I don’t see how we could have taken off with 14 more (trustees) with the need of cash,” Dufford said.
Trustee Dr. John Hutto said the medical staff was not pleased with the Meditech product and defended Tremblay.
“She is not going to sacrifice her personal integrity by giving us false information,” Hutto said.
“I don’t think Marilyn is so thin-skinned to not understand that we have a responsibility to question things when things should be questioned,” trustee Dr. Oscar Butler said.
Covington said he has “been in the business a long time” and knows numbers can be “steered” according to desires.
Series 1998 bondsJason Sussman of KaufmanHall provided trustees with several alternatives to consider in addressing the hospital’s outstanding Series 1998 bonds.
Sussman recommended the board consider paying off the outstanding $17.7 million by selling new variable rate bonds and getting a letter of credit enhancement. Under a letter of credit enhancement, a bank’s credit rating would be used for better backing of the bond.
The process would take about two or three months to implement.
“We were happy with the structure originally. Let’s stay with it and the variable rate,” Sussman said. “The rates have been going good.”
In 1998, the hospital issued a $30 million variable rate demand bond through Ambac Assurance but, in February of this year, Fitch downgraded Ambac’s credit rating from a AAA to AA, prompting bond purchasers to get cold feet.
If Ambac’s rating does not improve or the hospital does not find an alternative, RMC’s interest rate on the bonds could increase.
Sussman said under the letter of credit/variable bond rate scenario, in two or three years the hospital could make new investments which would create capital capacity and help the hospital remain competitive in the marketplace.
Under Sussman’s recommendation, the hospital’s operating margin would increase to about 1.07 percent. The operating margin would be below the Standard and Poor’s current A- target of 1.80 percent.
A hospital’s credit rating is an indication of its financial strength and borrowing capabilities. The better its bond rating, the cheaper it is for the hospital to borrow money.
The number of days cash on hand the hospital would have under this scenario would be 137 days in 2009. In 2012, the number would be 132. The S&P’s A- target is 170 days. The BBB rating is 156 days.
“You will have to continue to make investments,” Sussman said, explaining that if the bond was paid off “in one fell swoop” the days cash on hand would immediately fall to about 109 days. By 2012, the hospital’s days cash-on-hand would be 117 days, he said.
Sussman said the drop would most likely result in an immediate rating downgrade, negatively impacting the hospital’s ability to borrow and reinvest.
“If we have a major capital item and you have to go to the credit market, we would be sitting with a relatively light operating margin and low cash numbers with days cash on hand,” he said.
Under the bond pay-off scenario, the operating margin would be 1.23 percent in 2009, and 1.28 percent in 2012.
Covington repeated his belief that paying off the debt is not such a bad avenue to take.
“It costs you to borrow money,” Covington said. “This particular situation puts a burden on the employees of the hospital where they have to increase profit margin on operations because of the bad financials. You can write the check and you will double profit margin right there.”
“We can still go to the bond market, we may be speculative, but I don’t think we will be speculative for two or three months,” Covington said.
“I would absolutely and categorically disagree with you on that,” Sussman said. He claimed that if the hospital went to the capital market in 2012 with an operating margin of 1.28 percent and days cash on hand of 117, the hospital’s interest rate on any borrowing package would be in the 7.5 percent range rather than about 4.2 percent.
Trustees also discussed other alternatives such as doing nothing with the bond, borrowing money from a bank, using fixed-rate bonds and paying half the bond off with cash and refinancing the remaining portion.
The information will be presented to the board for further review at a planned budget workshop Tuesday, Sept. 9.
T&D Staff Writer Gene Zaleski can be reached by e-mail at gzaleski@timesanddemocrat.com or by phone at 803-533-5551.
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gradnurse wrote on Sep 11, 2008 3:45 PM:
You claim that the work environments and leadership have been “decimated by the current COO” but I would differ with you on this aspect. Just as “Absolutely” stated in their comment employees are now being held accountable for their performances and leadership initiatives have been implemented for a Shared Governance Model so that all nurses within the organization have a voice. Did any previous COO implement such initiatives? I think not, at least not in the period of time that I have been employed with the Regional Medical Center.
As far as the clinical aspect and what the COO knows or doesn’t know I can only say that no COO that I have ever met at the Regional Medical Center has been a clinically trained person nor did they completely understand all aspects of the “clinical affairs” you speak of. I would like to credit the COO with having competent Directors working with her in order to facilitate management of the clinical issues and results that find the Regional Medical Center comparable to other area hospitals.
I cannot speak to the confidence colleagues throughout the facility have in the COO. I can speak to the change in employee morale on the majority of units since management changes have been made in the recent past and can say that I feel that things are only going to improve. Once colleagues see that level of culture change I am sure that those you claim have no confidence in her will see that the organization is making changes for the benefit of the organization as a whole. If the changes do not have a positive impact I am sure that many of those same colleagues will become part of the nursing turnover that we discussed previously. Either way you were correct in your final thought of your last comment “what comes around goes around” and none of us will escape final judgment. "
Avenger wrote on Sep 11, 2008 6:48 AM:
Avenger wrote on Sep 9, 2008 6:35 AM:
There is a perfectly good reason why you never see her name in the newspaper. It is a purposeful move...she flies under the radar. If she wanted to have her name in the paper, believe me she could since a T&D reporter is at every board meeting. She stays in the background and maybe throws other people under the bus if there is any backlash.
You are mixing your data elements in your argument. Nursing turnover and nursing retention are TWO completely different things. I am sure there are long term employees at the RMC just like there are any other hospital. And just like any other hospital, there are long term employees who just repeat their performance year after year; never getting any better. Tell me, do you work with any of these? That is not a very positive attribute for a company.
Nursing turnover is the real marker of stability of an organization. Ask HR what it is and then judge for yourself. I think it is YOU that will be surprised when you compare it to state and national standards. Nurses leave organizations because of poor leadership and work environments. Both of which have been decimated by the current COO.
Finally, gradnurse, the hospital compare website that you mentioned speaks to quality clinical results. I think Goodlett knows squat about clinical affairs. If anyone can lay claim to those results it is the doctors and nurses and other caregivers at the Regional Medical Center.
I think minimouse was a little hard on you. I am glad you are enthusiastic and I am glad you support your COO. Unfortunately, she does not enjoy a high rate of confidence among her colleagues throughout the facility.
What comes around goes around and Goodlett can not escape final judgment. "
gradnurse wrote on Sep 6, 2008 11:17 PM:
minimouse wrote on Sep 5, 2008 9:02 PM:
When you finally get to be a nurse in a real hospital you will see that this rmc was only your first stop towards the greatness you deserve. Work hard get experience and then get out of this boil on the a -- of medical professionalism. "
gradnurse wrote on Sep 5, 2008 3:26 PM:
As far as the Chief Nursing Officer I am sure that there must have been a reason for that separation. I would not begin to try to judge why a person left a position after less than a year unless I worked closely with them. Nursing turnover happens and the Regional Medical Center is no exception to this. Have you ever looked at the retention rate of the nurses at the Regional Medical Center? There are nurses there that have been with the Regional Medical Center for more than 20 years. What does that say about the Regional Medical Center.
As far as results, just compare the Regional Medical Center to area hospitals. This can be done at hospital compare at the following website www.hospitalcompare.hhs.gov/Hospital. The results just might surprise you.
The Regional Medical Center appears to be attempting to put systems in place to improve the results you discuss but with trustees that baulk at every mention of change such as Mr. Covington how can they every move forward? Is the problem really the COO? Seems to me that the COO has rarely been mentioned in T&D articles by the Board of Trustees seems to be in the paper at regular intervals. Just one "gradnurse" opinion. "
Avenger wrote on Sep 5, 2008 1:59 AM:
From my read of the T&D, Mr. Covington isn't the only trustee who has alleged misconduct. But being the good "gradnurse" you are, you need to do your own assessment after reviewing the data available to you.
I am not qualified to comment on Mr. Covington's knowledge or skills as they relate to a possible run for the COO position at RMC. I will point out that as a trustee, he certainly has responsibility to "call it the way he sees it." And further, someone saw fit to appoint him to the board so I'm not sure that I would completely discount his experience or knowledge as you have in your last sentence. A trustee isn't charged to know everything about hospital operations but they should receive explanations that satisfy them and the community that they serve.
Why should the sitting COO exit? Just look at her record. How many controllers have come in and out of the organization under her leadership? What happened to the previous Chief Nurse who wasn't afforded a year in a new role to get things accomplished? How do you explain the significant nursing turnover? It's all about results and from what I see and hear and read, RMC is not achieving the results it should.
As a citizen, I continue to be concerned about the care aspects and management of the Regional Medical Center. "
absolutely wrote on Sep 4, 2008 1:49 PM:
gradnurse wrote on Sep 3, 2008 12:15 PM:
Avenger wrote on Sep 1, 2008 11:15 PM: