Salinas Valley Memorial Hospital Plus Natividad Medical Center The Only Option?by Richard Kuehn on 06/28/12
Salinas Valley Memorial Hospital (SVMH) is running out of options, with HCA Healthcare deciding not to enter a bid to affiliate with SVMH, leaving it with only one potential partner, Natividad Medical Center. SVMH was notified this week that HCA Healthcare won't be submitting a letter of intent by next Monday's deadline. "It is a surprise," SVMH spokeswoman Adrienne Laurent told The Monterey Herald. "Certainly, we want as many options before us as possible, so it's a disappointment from the perspective for everyone at Salinas Valley Memorial and the community. That said, we've been operating the hospital as if it would remain a stand-alone organization indefinitely," she said. Although management continues to state that remaining independent is an option, that seems unlikely after its CFO Bob Dvorak said at a recent town hall meeting that it would need to raise patient volume and raise prices after losing $10 million in its last two fiscal years and seeing revenue decline. Health care reform is expected to cause revenue to shrink by $60 million per year, so this seems like an unlikely scenario. But it's not just cash to cover losses that they need. He said they need to fund more than $500 million in capital expenditures to fund a new hospital tower by 2020. In order to do so, it would have to cut $75 million in costs per year, much of which would have to come from employee pay concessions. The National Union of Healthcare Workers (NUHW) will certainly be up in arms about the prospect of further cuts in pay and or benefits. Natividad and SVMH are planning on merging into a new public authority vehicle, which would call for a public vote, possibly in the November elections. I wish we could get this issue behind us as it has got to be a distraction for management at both SVMH and Natividad. But given that HCA gave no reason whatsoever for its sudden disinterest in SVMH, anything could happen.