After recent budgetary shortfalls, Duke University Health System officials are hoping that two new additions to the Durham Regional Hospital management team will bring the community hospital back to sound financial health.
With the appointments of Steve Owen as chief financial officer and Richard Liekweg as chief operating officer, it seems as if pieces of the Durham Regional puzzle are starting to come together.
The changes come just after an audit revealed accounting errors and a $5 million deficit at Durham Regional, which merged with Duke in 1998.
The hospital originally thought it had a budget surplus of $1.2 million last year.
One of the financial issues that has plagued Durham Regional and still puzzles hospital officials was an incorrect estimate of the previous year's financial results, said hospital CEO Richard Myers. "I don't have all the answers to that," he said.
Other reasons for the financial difficulties have been problems with insurance companies' reimbursements.
Approximately 65 insurance companies have contracts with Durham Regional, and each one uses a separate formula for reimbursement.
The hospital must work through a complicated and involved process with each company to retrieve its funds.
The cut in Medicare payments from the Balanced Budget Act also played a factor into Durham Regional's financial growing pains.
Duke Hospital CEO Michael Israel said plans are in place to help Durham Regional. "We're certainly well-engaged in the process of return[ing] to financial stability," he said.
Israel added that West Hudson, a management firm, will analyze the hospital's revenue cycle and focus on operations to maximize efficiency and effectiveness.
Now, the two new appointments to Durham Regional's leadership team set the stage for effective strategic planning.
Owen, who was appointed CFO this week, will be responsible for bringing the hospital back to financial stability. Bob DeFilece, Durham Regional's former CFO, resigned at the time the financial glitch was discovered.
However, Myers said, "[DeFilece's resignation]
Owen temporarily took the reins within a few days notice after DeFilece resigned.
Despite the challenges that lie ahead, he said, "I'm very optimistic. The good news is that everything I've seen is fixable."
Having been in the health care business for 22 years, Owen has worked in various hospitals in the Northeast and Midwest, as well as spending eight years at Rex Hospital in Raleigh.In addition, he was the CEO of Union Hospital in Maryland. "I've always kept my hands on finance experience," he said.
Owen outlined two primary areas of focus at Durham Regional.
First, he said, he wants to clean up processes and develop procedures in the patient accounting area in order to receive the necessary and correct payments from insurance companies, Medicare and Medicaid.
Second, he said he will "make sure financial reporting is accurate, timely and complete-with no surprises."
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Owen will work closely with Liekweg, the new COO, in providing performance information and analysis to put the hospital on sound financial footing.
Liekweg, who makes the transition Nov. 1 from senior associate COO of Duke Hospital, said one of his immediate goals is to gain a better understanding of the financial situation.
"I need to get a quick education in the financial health of the organization," he said.
Liekweg has been at Duke for 12 years, and currently works with the medical staff and helps handle the budgets and planning for various sectors of Duke Hospital, including the surgical, oncological, digestive, transplant, and renal services.
"He's one of the most solid individuals I know from a professional and personal perspective.... He analyzes situations very well," Israel said.
Liekweg stressed the importance of working with Durham Regional's employees in order to uphold a commitment to maintaining programs and the quality of patient care.
"I have begun to get a sense of the vision of the medical staff and the board [of directors]," he said.
In his new position at Durham Regional, Liekweg will be responsible for the management of clinical operations, as well as finance, human resources, information services and facilities. He stressed the importance of working closely with the management team as well as the medical staff.
Liekweg added that further review of the financial situation is necessary before he can specify which opportunities exist to enhance revenue.
He emphasized, however, Duke's commitment to no layoffs of employees for three years, part of the contractual agreement between the Health System and Durham Regional when DUHS took over management of the facility.
He added, however, that they may look into the option of allowing the size of Durham Regional's staff to become smaller through natural attrition and transfers to other facilities in DUHS.
"I think there's a lot of opportunity to correct the financial deficit," he said. "If I didn't think there was an opportunity to improve the... situation, I wouldn't have taken the job."
Owen and Liekweg have not met extensively to study the path of Durham Regional, although sustained cooperation is a plan for the near future.
"I have shaken [Liekweg's] hand three times. We are both very new to each other," Owen said. "I've heard he's been able to affect positive changes, and I'm real anxious to work with him."
Liekweg and Owen will sit down in the next few weeks to coordinate with one another and discuss their plans for the hospital.
And, with the Health System and the national health care market constantly changing around it, Durham Regional appears to move ahead with both confidence and trepidation.
"It's very difficult to be in health care these days--it's a difficult environment," Israel said.
Charles Blackmon, chair of the Durham Regional board of directors, concluded, "There's never been any question in my mind that Durham Regional acts as a community resource-what comes into play is how that is going to be achieved."