After posting a $16 million shortfall for the first few months of 2016, Greenville Health System on Tuesday said that it would be back in the black again by the end of the fiscal year.
GHS Trustees also voted to take their new governance plan, which they’ve finalized and put into action, back to the state Supreme Court to decide whether the hospital system actually has the authority to execute it.
GHS’s budget shortfall resulted from lower inpatient volumes combined with spending hundreds of millions of dollars on its new IT system, acquiring physician practices and expanding its provider network, among other investments, officials said. GHS currently has about 15,000 employees over eight hospital campuses and 175 outpatient practices.
To make up for the loss, officials said they planned to eliminate more than 400 positions, reduce the capital budget by $39 million, and institute other cost-cutting measures such as restricting non-essential business expenses and re-evaluating contract labor agreements. In addition, fewer than half the 594 jobs planned in the $2.2 billion 2016 budget have been filled.
“We’ve seen a reduction in some utilization, and we’ve got this huge computer program we’re putting in,” CEO Michael Riordan told the trustees Tuesday, noting that other hospitals around the country initially saw similar dips after installing the Epic IT system.
Though it has spent $103 million on Epic so far since 2014, GHS has budgeted a total of $146 million for it through the fiscal year, which ends Sept. 30, chief financial officer Terri Newsom said.
Riordan said the hospital is seeing signs of improving finances, with Newsom reporting a $324,000 profit in February. But he added that while that was good news, one month doesn’t constitute a trend.
However, Newsom, who said the current fiscal difficulties have nothing to do with the restructuring, projected that the hospital will be on more solid footing next month.
And Riordan said that despite this “bump in the road,” GHS will proceed with its strategic plans.
“We’re making this correction now,” he said. “But we’re continuing to grow.”
Meanwhile, the trustees adopted a resolution to ask state’s high court whether the restructuring is in fact lawful.
GHS wants to change its governance structure so that it can remain a public nonprofit as part of a larger private, nonprofit multi-regional health system. Officials say that will allow the system to respond quickly in a rapidly changing health-care environment and expedite partnerships with other health-care facilities.
Under that plan, GHS would lease its assets to an affiliated organization run by the multiregional, and a new board for the private entity would make strategic and operating decisions.
Trustees of the public entity, who are approved by the Greenville County legislative delegation, have those responsibilities now.
But the restructuring plan was challenged by several members of the delegation as taking public assets out of public oversight.
GHS got about $82 million in county tax funds during the 1960s and 1970s to build parts of Greenville Memorial, Hillcrest Memorial, North Greenville Hospital and Allen Bennett Memorial.
And the idea was put to the high court.
In January, however, the court said that because GHS hadn’t finalized its plans, it couldn’t determine whether such a move would violate any statutory or constitutional provisions. Therefore, it said any ruling would be improper.
So articles of incorporation for the Upstate Affiliate Organization and the Strategic Coordinating Organization were filed on Feb. 18 with initial organizational meetings held this month to approve and subsequently execute a master affiliation agreement and the lease of GHS holdings to the UAO, board chair Jim Morton said. It was done in a way that can be reversed if the court rules against GHS, although officials are confident they will prevail, he said.
“The resolution is the culmination of everything we’ve been talking about for the last couple of years ,” he said. “And we’re also proceeding very soon, in the next few weeks, to file another petition with the Supreme Court to consider our situation.”