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Consultants find cost savings at Kona Community Hospital

June 19, 2014 - 7:24am

A team of consultants hired by Kona Community Hospital say the organization is making strides toward more efficient operations and money savings.

Three months into a nine-month process, consultants told the West Hawaii Region Board of Directors on Wednesday that they’ve identified at least $4.5 million in savings and revenue opportunities.

“The big focus now is going to be taking those opportunities and putting them in place so we can start to see those savings,” said Michael Saunders, manager with Huron Consulting Group.

KCH engaged Huron to find ways to identify and implement cost savings, enhance financial and operational performance and maintain or improve quality of care delivery. All of these improvements would make the hospital more attractive to a partnership with another health care organization — a major goal for KCH, which is part of the Hawaii Health Systems Corp.

Nineteen initiatives in non-labor areas will save the hospital approximately $1 million in trauma, food service, pharmacy and other areas, consultants said.

A team of KCH staff and Huron consultants are examining billing and collections processes, supplies and purchasing contracts and costs, length of stay management and physician contracting. The hospital is also examining potential changes to how it staffs and schedules employees for greater efficiency and less exhaustion of employees.

Greater detail on the progress was presented to the board in a packet, but the board declined to release the report to the press because it was in draft form.

The hospital’s goal is to reduce overtime by one third, said Chief Financial Officer Dean Herzog.

“Overtime is really high here,” Herzog told the board. “We are looking at what we can do to train and educate staff, know our union rules and what causes overtime so we can improve our processes and still maintain a high level of patient care.”

Asked by Board Member Renee Inaba how staff is reacting to the initiatives, Herzog responded, “its been great so far.”

Herzog said the hospital is set to end June with a $3 million annual loss, one which the hospital anticipated. The HHSC hospitals around Hawaii rely on a state subsidy and emergency funding.

Last year, Huron improved efficiency at North Hawaii Community Hospital, and NHCH entered into an affiliation agreement with The Queen’s Health Systems. Prior to the change, NHCH had operated for years at a $4 million annual loss.

Besides issues of outdated infrastructure, KCH’s sewage treatment plant is too small to allow further development of the hospital. Operating rooms are maxed out, there is no room for the hospital to expand at its current location, and parking and access are inadequate. Stakeholders who were surveyed last year overwhelming agreed on the need for a new facility — something which has been under discussion for years. There are several potential sites, including an offer of 40 acres of free land at the corner of Hina Lani and Ane Keohokalole Highway, but no firm plans for a new hospital.

A bill sponsored by Sen. Josh Green, D-Kona,Kau, to allow the HHSC to engage in such a public-private partnership died in committee in April.

A new effort to gain legislation allowing partnerships will be important for the hospital’s future, said Joel Gimpel, the board’s acting chair.

“The only question is whether we can reach a suitable compromise with all the different pressure points,” Gimpel said.

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