Struggling Taos hospital announces 12 more layoffs

CEO says facility been struggling for 9 months

TAOS — The first sign of financial problems for some staff at Holy Cross Hospital came last fall when their paychecks were late. The first sign for patients might have been when some comforting extras, such as foot massages and aromatherapy, abruptly stopped.

The hospital quietly laid off five employees before Thanksgiving, as it wrestled with a hefty and rapidly growing gap between revenues and expenses.

When Holy Cross laid off 12 more employees Jan. 12, including the marketing director, a radiologist, two medical transcriptionists and three administrative assistants, CEO Bill Patten announced the move to the public right after informing staff. Patten also released the hospital’s financial statement showing the hospital is in a cash crisis.

Employees had been warned in December that layoffs were imminent after Christmas, according to Patten, CEO of Taos Health Systems, which manages the hospital.

On the day the layoffs were announced, the hospital’s nurse practitioners and physician assistants voted to join District 1199 of the National Union of Hospital and Health Care Employees.

Lorie MacIver, a nurse at the University of New Mexico Hospital and the District 1199 representative, said that while financial problems haunt many rural hospitals, Holy Cross seems to have more than its share. “The community needs to seriously talk to the hospital board and the county commissioners about exactly what is going on at the hospital,” MacIver said. “Ultimately, it is the community’s hospital.”

Patten said Holy Cross has struggled with the gap between revenues and expenses for nine months, a problem that partially stems from a delay in Medicaid payments.

It also has seen a $600,000 increase in its annual malpractice insurance and a notice from Medicare that it owes $691,000 to the government for overpayments in 2013.

The hospital has shifted to a new Medicare payment model for vulnerable rural hospitals called Critical Access, which it hoped would increase revenues. But Patten said that took more time than expected.

In addition, the hospital installed a new electronic records management program, a software change that Patten said came with problems, as most new systems do.

Issues with the software set back billing and collections. By December, Patten said, the hospital was owed $30 million from insurance companies and patients.

In the fall, the hospital pushed off payments to vendors and set up a $2 million line of credit at Centinel Bank of Taos to ensure salaries were covered.

“Of all our priorities, we have to take care of our employees,” he said. “That’s number one on the list.”

The hospital has taken several measures to cut costs, including canceling a contract with a firm that was helping with reorganization efforts, forgoing Thanksgiving gift certificates for staff and slashing extra patient services such as foot massages that weren’t reimbursed.

But those steps weren’t enough. The hospital continued to fall behind on payments.

Tom Blankenhorn, a Taos County commissioner who is part of a community health group studying the hospital’s challenges, said Holy Cross finances had improved in recent years.

“But we always knew it was a razor-thin margin,” he said. “… Every day it’s a battle.”

A version of this story first appeared in The Taos News ,a sister publication of The Santa Fe New Mexican.