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Luis Hospital Laments Funding, Staff Shortages

Aug. 11, 2006 – Like many other government departments and agencies, the Juan F. Luis Hospital on St. Croix is suffering from a lack of funding and a shortage of qualified employees. During the first round of budget hearings Friday, Luis Hospital Executive Director Gregory Calliste said other challenges arise from the hospital's inability to increase salaries for new staff members or to recruit licensed practical nurses for the emergency and operating rooms.
Anthony Saul, the hospital's chief financial officer, outlined the hospital's cash flow problems, which have been exacerbated by about $36 million in uncompensated patient care costs.
"This balance has accumulated over a period of time and comes from the people that we serve at the hospital, both from the government and the private sector," Saul said.
Calliste said the hospital has also had to pay for a small population of residents that have been abandoned by their relatives and are essentially living at the facility. Though the hospital has been able to collect Social Security payments for seven of the individuals, it has only been a minimal amount, he said.
"It costs about $1,500 a day to keep the patients in the hospital versus the $250 a month we get from Social Security. And while the Department of Human Services has said they could accommodate some of these residents when the Herbert Grigg Home for Aged is opened, this situation is currently creating a great liability for the hospital."
Payments owed to the hospital are not the only financial obligations plaguing Juan F. Luis, however. In addition, the facility has an accumulated debt service of approximately $17 million (which includes $5 million outstanding to the V.I. Water and Power Authority), and owes the government another $18 million for subsiding the salaries of employees paid through the hospital's Health Revolving Fund.
Calliste said the hospital has been behind on its payments because of the inability to generate enough revenues or collect debts owed by patients. Since Luis Hospital is a semi-autonomous agency, the revenues brought in through patient care services goes toward funding operations, while money appropriated by the General Fund covers a majority of the hospital's personnel costs.
Revenues collected by the hospital are deposited into the Health Revolving Fund, where 50 percent of the funds are earmarked for the remaining salaries, while the other 50 percent is used to finance supply and equipment costs, utilities and capital improvements, among other things.
Calliste said the hospital has recently stepped up collection efforts by partnering with a financial company to manage revenue operations, which allowed Juan Luis to collect $23 million in Fiscal Year 2006. While revenues are projected to top $30 million in FY 2007, Calliste said that this amount will not be enough to cover all recurring expenses and outstanding obligations.
"Our commitment to the government, for example, comes as a result of what has been paid for those employees not covered by the Health Revolving Fund. While we have to pay $175,000 every two weeks, we are sometimes late on the payments because of our cash-flow issues," he explained.
Calliste added that the hospital has also worked out a payment plan to cover the debt owed to WAPA, which requires Juan Luis pay $50,000 a month, in addition to its current utility bills.
"Our current costs are about $200,000 a month, which amounts to $50,000 for energy consumption and $150,000 in LEAC (Levelized Energy Adjustment Clause) charges," he said.
"We have written to the Office of Management and Budget to help us with the LEAC charges on a consistent basis, because we aren't able to afford everything. The $50,000 we can handle."
Calliste asked senators to authorize an appropriation transfer of $1.5 million to help the hospital take care of its utility costs. The money would come from cost savings realized from the hospital's FY 2006 appropriation.
Additionally, Calliste and Saul asked senators to appropriate an extra $6 million in FY 2007 to help the hospital fund salary increases and various capital improvement projects. While hospital staff said they would need about $53 million to cover expenses during the next fiscal year, a General Fund budget of $22.3 million has been recommended by OMB.
Calliste said the extra $6 million could also help in upgrading the hospital's facilities and computer infrastructure. However, another $8 million is needed to fund the construction of the Virgin Islands Cardiac Center, which is scheduled to be finished within the next 15 months, he added.
Calliste explained that $3 million previously appropriated by the Legislature for the new center "does not exist," leaving the hospital to search for new revenue sources.
During the meeting, hospital staff said more money would be needed in the future to adjust salaries for various employees, including new nurses coming into the local health care system.
According to Frances Molloy, chairwoman of the hospital's governing board, low salaries have prevented Luis Hospital from hiring qualified staff. As a result, the hospital has had to outsource nursing services and has been recruiting applicants from Puerto Rico.
This process has proved problematic, however, since the local Board of Nurse Licensure has placed certain limitations on contracts awarded to nurses coming in from the nearby island, Molloy said.
She explained that potential applicants are required to work in the territory for up to one year and pass an English proficiency exam, among other things. But in order to work in the territory for more than one year, the nurses have to pass the National Nursing Exam, which is not a requirement of Puerto Rico's nursing system.
"The period of one year is definitely a hindrance," she said. "With our nursing shortage, we would want them to stay on staff for a longer period of time."
Calliste added that if nursing salaries were increased, then the hospital would be able to attract licensed applicants who would be able to stay in the territory for a longer period of time. He said that the starting salary for a registered nurse in the territory is $35,000. "Other states are offering $65, 000," he said.
An increase in nursing salaries would also help cut costs for the hospital, since it is currently paying out more money for contract nurses, Molloy added.
Present during Friday's meeting were Sens. Pedro "Pete" Encarnacion, Juan Figueroa-Serville, Louis P. Hill, Neville James, Terrence Nelson, Ronald E. Russell and Usie R. Richards.
Sens. Roosevelt C. David and Norman Jn Baptiste were absent.

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