President's Report - Franklin Community Health Network Annual Meeting
September 24, 2007
For several years, we have used the phrase “Nationally acclaimed and one of the best hospitals in New England” as a positioning statement. It is true - we are in fact nationally recognized for our work - but that phrase falls short of capturing who we are and what makes us special.
Last week Farmington celebrated its traditional annual fair. This past weekend the Common Ground fair was also held. These fairs remind us of our heritage and values, that we are a people rooted in family and community. At FCHN, we are also growing something special - in this case, a health system, something that is essentially important to our health individually and as a community.
Our system has in fact become nationally known. Our accomplishments in rural health delivery inform the country.
We can all have a sense of pride that we have done this as a local organization with a community-based sense of purpose. We are home grown and so far we remain so. We center our work on what is best for the patients and the community we serve. Our 2007 annual report celebrates those who are a part of FCHN.
These past several years have been especially challenging. We have been challenged in several basic ways: financially, organizationally, and physically.
I. Financial Challenges:
Our financial challenges stem primarily from state and national governments that expand programs while cutting back on payments.
Last year we made some headway in a tough environment. We got some of money owed to us by MaineCare for years past. We received about $4 million, but we are still owed for services we have delivered and have not yet been paid for. We have gone to State Court to seek payments for the remaining moneys - about $9 million - which are still owed to us. We have also gone to Federal Court to ask that they require the State of Maine to pay hospitals more fairly. We are paid one half the state average and one quarter of what is paid to the highest cost hospital, all because in the year when the base rates were set we were the lowest cost hospital in Maine.
Last year we struggled financially, but we made remarkable headway. Due to smart strategic decisions, teamwork, and the efforts of all, we exceeded our budget. According to data just distributed by the Maine Hospital Association, we were in the top 5th of the most financially successful hospitals in Maine. But as far as I can see ahead we’ll be sailing though turbulent financial weather.
During the past year, with leadership by Maureen Goudreau, we raised $630,000 without a capital campaign, which is an all time high for FCHN. In the years ahead our financial challenges will require us to build our endowment so we have the ability to continue to support programs that lose money. We need endowment money to continue to be innovative and creative, to upgrade our facilities and equipment, and to help recruit, develop, and retain staff. In the next year, with your support, we will launch a long-term effort to build our endowments through a new effort of planned giving.
I also want to give credit to Leah Binder for uncommon success obtaining grant funding and creating wonderful new programs. I don’t have the time to mention all her accomplishments, but they are both nationally unique and locally important.
Last year Evergreen Behavioral Services rebounded from big losses the year before, thanks to April Guagenti and the EBS staff.
My compliments to Eric Martinsen, Tom Dean and all the finance staff for their good work. I also want to recognize the wonderful help and leadership of Janet Mills, Walter Gooley, Gary Knight, and Tom Saviello. Janet introduced four bills to the Maine State Legislature to help us, and three ultimately passed. This will greatly benefit us.
In the next year we needs to hone our financial skills at FCHN by developing improved means of forecasting, reacting faster to changes, and determining what we should do with programs that operate at a deficit.
II. Organizational Challenges
I start by mentioning a structural challenge that has gone well: the creation of NorthStar EMS. We combined five good local ambulance services into one great regional service with local roots. We have quietly achieved this spectacular accomplishment - creating one of the best rural EMS systems in the country. We did it without controversy, including this past year when a single funding formula was created for the entire region. If only the school consolidation could go as well. Credit goes to Dave Robie, the entire staff of NorthStar, to the NorthStar Advisory Board, and to its Chairman, Darryl Brown.
Now I’ll report on a structural change that has been much more complicated.
When I came here 13 ½ years ago, FCHN employed three doctors. Today, we employ 68 providers. This is a significant change. Between FCHN and the area’s HealthReach Community Health Centers, now more than 90% of all local doctors and other providers are employed. For FCHN, our employment of doctors accelerated quickly in the past four years… faster than we wanted. When the doctors decided they wanted to make a change and become employed they wanted fast action: we did so but it was at a cost. The cost was that it happened in a somewhat disorderly way. Contract negotiations were difficult, sometimes strained. It has been tough and fast-paced: we created Franklin Orthopedics, Franklin Urology, and Franklin Surgery; we opened Wilton Family Practice; we took over the Rockomeka Practice in Livermore Falls; we came to be the sponsor of Anesthesiology; and we doubled the size of the hospitalist program. We also expanded Pine Tree Women’s Care and Pine Tree Internal Medicine with new doctors and a nurse mid-wife.
This has all come about very recently. Our support of practices did not happen in an orderly, incremental way. We rushed to do it fast. We did it, but only now are we starting to see this all settle down. We now sponsor fifteen different practices, involving 68 providers and a total staff of more than 250. That’s double in size from what it was four years ago. In the past we concentrated on getting it all started; now we need to concentrate on getting it to run smoothly. We are getting better at this, but we do not have all the problems worked out.
Here’s a preview of what’s ahead next year.
The basic physician contracts are settled, but in the next year we will start negotiations for new agreements with the Pine Tree doctors. We will research an alternative to the LSS ambulatory computer system, and we will decide either to keep LSS and improve it, or to replace it with another product. We’ll do this with physician and staff involvement, and we’ll start to implement a decision within six months from now. We need to get better at office systems within our practice, for the benefit of our doctors and our patients. We need to get better pricing systems in place and do a better job with billing and collections. In the past year we have done spectacularly well recruiting new doctors. We have more doctors in this community than ever—and by a very wide margin. Now we need to concentrate on retaining physicians and all our staff.
Like our financial challenges, our challenge running medical practices smoothly will always be a big challenge, but in this area I think things are going to settle down slowly. The hard part - the forced rush to start everything right away - is over. Now we can concentrate on getting pride and satisfaction up higher, and I’m very confident that this will happen. I want to especially thank Leslie Hawkins and her team for their hard work. I also want to thank Dr. Jay Naliboff for his willingness to serve as Medical Director of Pine Tree. Jay is a very practical, “let’s get the problem solved”, kind of leader. At the hospital, there has also been a changing of the guard. Dr. Rod Prior left to become the Medical Director of MaineCare. Dr. David Dixon is now in place and we benefit greatly from his experience, dedication to this new role, and the respect he has from the medical staff. I also want to particularly thank Dr. Steve Zanella, the President of the Medical Staff. He is a great leader in a quiet way. He has given much impetus to the medical staff’s efforts to improve clinical quality.
III. Facility Issues
All this recent change and growth has major implications for our facilities. We need new and different facilities now because of the growth of hospital-sponsored medical practices and because of changes in technology and treatment practices within the hospital.
Last year, we began a great move forward on facilities: we got hard-fought approval and funding to construct a new medical arts building, which is now underway behind me. This facility will open early next summer. It’ll be great. We now turn our attention to other facility needs, especially the need to expand our outpatient program and get a new facility for Pine Tree Family Practice. We need to renovate portions of our spaces for inpatient care and for radiology, and expand our bed capacity for expected long-term growth. Evergreen and HCC need more and different space. In a few weeks a sub-committee of the Long-Range Planning Committee will begin work on our facilities plan for the next 5 to 7 years to address all these needs.
Those have been our three big challenges: finances, organization and facilities. We have also done good work improving quality, adding new services, recruiting more doctors, improving collections, and adding new technology. In the past year we have made huge strides forward… but we still have a long way to go.
Lastly I want to comment upon leadership. We are in the process of a leadership transition. Near the end of 2008, I will leave as President. Next year, in September 2008, I’ll deliver my last report as your President. Next spring, the board will begin an executive search for a new CEO to succeed me. I’ll stay until the board selects the new President, but our intention is for that to happen toward the end of 2008. The board will conduct a national search, and they will have a strong candidate in Jerry Cayer. The board may have other good locally based candidates to consider, as well as other experienced candidates from Maine and elsewhere as our reputation will make this search attractive for candidates.
The last few years have been a period of transition for the board. Three years ago we combined the FCHN and FMH boards, but only this night will we have we gotten the number of board members down to the desired number of 18 to 19. We made this change slowly and gracefully. Thanks to all of you, the board and its committees are strong and viable.
The management leadership group is also strong. The administrative team at FCHN is one of the best management teams in Maine. This team is exceptionally accomplished. Jerry Cayer is doing a great job in the new role of FCHN Executive Vice President. Ralph Johnson, who joined us this past year as our CIO, is making an important contribution of leadership in IS and he’ll lead us to a better solution for our outpatient practices and he’ll help get us to an electronic medical record. Dave Dixon is doing a great job as our Medical Director. Tom Dean is outstanding as our Compliance Officer, head of Patient Accounting and General Counsel. Leah Binder continues to give outstanding leadership as a FCHN Vice President and the head of the Healthy Community Coalition. All of the management leaders are talented, dedicated and they work together as a team, which is very important.
During the next nine months, we will develop a new strategic plan for all of FCHN. Under the leadership of Darryl Brown as Committee Chair, with support from Leah and the entire senior management group, and with the involvement of doctors and staff and board members and community members, we will build a new strategic plan centering on facilities, core services, community health, family-centered care, and technology. We will also address the strategic aspects of finances and recruitment and retention. This work will be completed by July 2008 and will serve as the basis for strategic resource allocations and it will also inform the search for the new CEO.
I want to add my words of thanks for the generosity and work of the six board members who leave tonight from the FCHN and FMH boards: Gary Knight, Judy Upham, Carol Timberlake, Art Perry, Charlie Murray, and Dan Onion. All six have given much of themselves as a community service. They are all great people, and they all have been great board members. They will be missed.
John Bogar will remain on the board but he departs as Board Chair. I want to thank John for his leadership. He does so with grace, wisdom and goodwill. The boards have faced many tough decisions in the past several years. Through it all the boards have made sound decisions. John’s leadership has meant a lot to FCHN, more than he probably realizes because he is an unassuming person. Please join me in thanking John for his leadership as board Chair.
Our annual report this year, prepared by Missy Danforth, celebrates the special people who make this organization so great. The report includes a new section in the back on the community benefits of our work. Our organization is successful because we have so many good people, including all of you. My profound thanks to all of you - board members, committee members, volunteers, Auxiliary members, benefactors, friends, physicians, staff, managers - to everyone who is a part of FCHN.
As I end, I want to acknowledge Mandy Luce for her work. Mandy was the leader who organized this evening and Cheryl and others helped her. Please join me in thanking them.
We accomplished much last year in spite of all our challenges. The goodness of our work, the greatness of our accomplishments, and the source of our national accolades can all be seen in our people and in the roots of our heritage and values. Soon we will find a new phrase to express this reality.
I thank you!
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