A recently completed analysis by The Lewin Group concluded, Inova Mount Vernon Hospital does not appear to generate positive income [in the short run] under any of the scenarios.
Funded by Inova Health System, The Lewin Group, a locally based consulting firm, was brought in to the IMVH analysis process to evaluate a series of alternatives in determining the fate of southeast Fairfax County's only full service medical facility.
The scenarios consultants noted were: A competitor entering the market; status quo with the current trend continuing; IMVH enhanced in current location; relocate IMVH; and close IMVH but maintain the Healthplex.
Their first comprehensive report was presented to the Southeast Health Planning Task Force at their latest closed door meeting and was marked "Confidential: Not for Public Distribution."
However, it was part of the information package distributed at the second meeting of the Citizens Alliance Rescue Effort (CARE) executive committee held last week at the Mount Vernon Government Center.
The lead section of the report presents a profile of Southeastern Fairfax County. The report explained, "The service area for IMVH was determined based on the geographic origin of the hospital's patients." For this report, core services excluded joints, rehabilitation, and psychiatry services. The source of their statistics was IHS records.
The population to be served, the report finds, "is expected to grow by 22 percent to over 330,000 by 2010." The greatest growth is predicted by the report to be in the Lorton/Newington area which is forecast to have a 95 percent increase from 16,510 in 2000 to 32,185 by 2010.
IN ASSESSING THE demographics, the report pointed out:
*Low income consumers are concentrated along Route 1 in Southeastern Fairfax County.
*Uninsured and Medicaid-eligible consumers are concentrated west of IMVH; elderly between IMVH and the Potomac River.
*The region now served by IMVH has lower incomes and greater diversity than the rest of Fairfax County. Median household income in the Mount Vernon, Franconia, Kingstowne, Lorton/Newington area is $68,000. That compares with $96,000 in the Springfield, Fairfax Station, Burke area.
Under the heading, IMVH Services and Recent Performance, the report states:
*IMVH is both a community general hospital and a regional specialty referral hospital. It provides services associated with a community hospital such as surgical/medical, an active emergency room, and critical care. It also offers programs in psychiatry, joint replacement, and rehabilitation.
*IMVH had an average census of 162 inpatients and over 64,000 outpatient visits in 2002. With 232 licensed beds, 2002 occupancy averaged approximately 70 percent.
*More than 50 percent of rehabilitation, psychiatry, and joint replacement inpatients reside outside the primary service area.
*IMVH has a high regional market share for joint and rehabilitation services and a high local share for medical services. In each of the categories of joints, psychiatry, medicine, surgery, and rehabilitation, the Mount Vernon/Fort Belvoir area accounts for 54 percent of the total market share.
*Medicare is the dominant payer for inpatient services at IMVH, particularly for medicine and joint replacement programs.
Lewin notes, in the financial analysis, "After 2000, IMVH revenues leveled off; expenses continued to grow." It was in this same time frame that Inova's Healthplex facility opened in the Springfield area.
FROM 1998, the base year for The Lewin Group analysis, to mid- 2001, net operating revenue and total operating expenses tracked a near perfect parallel. But in mid-2001, there was a marked separation with revenue dipping and expenses continuing to rise. "IMVH generated operating income of $910,000 in 2000, then lost $8.1 million from operations in 2002," according to the report.
As Lewin assessed the possible "drivers" of the growing losses, they concluded, "Between 2000 and 2002, average daily census declined by 10 inpatients" while "discharges (and inpatient market share) remained relatively constant..."
Emergency room visits and outpatient surgery declined in the same period. This decline in emergency room visits has continued in 2003, the report stated.
Lewin points out, "The Healthplex appears to have had a role in reducing emergency room visits at IMVH." In each of the demographic area the ER visits dropped significantly from a low of three percent in Mount Vernon North to a high of 53 percent in the Kingstowne area.
The report also highlights that there is a growing staff problem at IMVH compared to other IHS facilities. "Updated analysis of active physicians shows that between 2000 and 2003, IMVH lost two physicians while the number at other IHS hospitals grew," Lewin states. The IHS facility gaining the most physicians was IFOH showing an increase of 20.
IMVH ALSO HAD the greatest number of physicians in the 60-plus age bracket generating cases. It was at 21 percent while other IHS facilities ranged from three to nine percent. In the under 60 age bracket for generating cases, IMVH had a low of 76 percent while IFOH had a high of 94 percent.
When it came to revenue analysis, Lewin stated, "Recent IMVH losses can be attributed primarily to inpatient services." Outpatient income losses grew only from 2.6 percent in 2000 to 3.5 percent in 2002. But, Inpatient losses ballooned from 1.7 percent to 11.5 percent in the same period.
Other factors impacting IMVH's bottom line, according to Lewin, are changing Medicare reimbursement rules and a higher Medicare caseload than other IHS hospitals. This resulted in, "All but one category of IMVH expenses to increase faster than revenue from 2002 to 2002." That was Interest Expense which declined 17 percent.
However, The Lewin Group also explained, "Many national trends are affecting IMVH." Among their list of negative impacts are:
*Medicare reimbursement payment changes,
*Hospital costs for technology and nursing staff salaries are increasing faster than reimbursements,
*State budget problems are negatively impacting Medicaid,
*After several years of increases, inpatient volume is leveling off, and
*Inpatient services are moving to outpatient and physician office settings.
Lewin admits, "The assessment began with five alternatives" that were narrowed down to two. The original group included closing IMVH. But, after careful analysis they have narrowed the field to: 1. Enhance IMVH in its current location; or 2. Relocate IMVH and put a healthplex at the current site.
"Our framework for assessing the alternatives emphasizes access, financial stability, and risk," Lewin explains. But, if the ultimate recommendation is to relocate IMVH, Lewin states that would take a minimum of five years, with a new hospital not opening before 2008.
LEWIN SEES THE following advantages to relocation:
*Higher volumes in 2008,
*Obstetric services would be more feasible,
*By 2010, a relocated the hospital would reduce the average travel distances by 1.2 miles for residents of Southeastern Fairfax County, and
*A healthplex at the current IMVH site, without a hospital, could serve most of the current ER caseload
The final element of the Lewin study concludes, "IMVH does not appear to generate positive income (in the short run) under any of the scenarios." Lewin takes each scenario and compares its impact on both IMVH and IHS.
In each case IMVH continues to lose money at the very least and is forced to close if a competitor enters the market, according to The Lewin Group analysis. As for IHS, Lewin envisions them increasing revenue in the scenarios of IMVH being enhanced at its present location or being maintained only as a Healthplex. The latter is the most profitable for IHS, according to Lewin.