Pasco Memorial Hospital has served the greater Pinto area for nearly fifty years. They have a large endowment from a local interfaith fund. The endowment makes it possible for Pasco Memorial to provide care that is charged on a sliding scale. The only requirement the fund puts on the hospital is that it controls costs through the use of stringent inventory control and efficiency in patient care systems.
The quality of care is consistently rated excellent. All facilities meet state and federal standards. Equipment and facilities are updated on a regular basis, thanks to the endowment. Pasco Memorial is a true community hospital with wellness programs, prenatal programs, and nutrition classes for those with chronic diseases.
The patient profile skews to the under-sixty demographic: The typical ER patient is a 35-year old male without a primary physician. The typical admission is a 24-year-old pregnant woman about to deliver. ER visits for stitches and broken bones for children, and heart attacks for those over 50 years of age complete the picture.
The Interfaith Fund of Pinto has been more than satisfied with the financial management at Pasco Memorial. Senior management at the hospital reports it feels supported and encouraged by the funding body. All indications are that the hospital will meet the goals set in the five-year plan ending next year. The current concern is for the five-year plan currently under development.
A Change in the Community
Pinto is a small city in the middle of a lot of land. Until now, the land has not been used for any commercial purpose. It is sometimes farmed, but mostly it sits fallow due to the harsh New Mexico climate. City management has tried to attract businesses to increase the revenue base for the city and surrounding area. With that revenue, they would improve the schools, which would raise property values. They also hope new businesses would offer additional employment opportunities at higher wages than current wages.
The available land has attracted a sports franchise seeking winter training facilities, a casino hoping to influence casino-friendly zoning and ordinances, and an aeronautical firm attracted by the climate and the availability of runway space. None of these have resulted in a firm commitment. This week, a retirement community developer has expressed interest in several hundred acres of land.
Retirement Haven is a high-end, independent living community for those sixty-five years and older. This community would attract businesses to the area to provide services to the residents. The sticking point is that the community wants an exemption from school taxes. They also plan to self-fund a library within the community. They plan to make use of the Pasco Memorial Hospital for their needs. They will not purchase the land unless Pinto agrees to add a wing to the hospital. This wing would offer the sorts of care most likely to be used by those over sixty-five. It would also include a rehab space and an Alzheimer’s unit.
The city of Pinto does not have this money to invest in the hospital up front. Without school taxes, they will be unable to free funds to provide for this investment in the future without abandoning plans to improve the schools. Pasco Memorial is faced with investing a great deal of money in inventory for products that will benefit these new patients if they come to the area. They are not at all sure they will be able to meet the fund requirements for inventory control and efficiency in patient care systems.
The Bottom Line
City officials, the board of the Interfaith Fund of Pinto, and representatives of the developer met over the course of several days. They agreed that they all wanted this development to go forward, but there were significant challenges to putting together a deal that did not result in a bond issue for Pinto or unwanted charges for the new residents. The Interfaith Fund wanted the development, too, but they were not in a position to underwrite the new wing and additional inventory.
All major parts of the deal were settled with the agreement of the developer to underwrite the cost of the new wing and the understanding that a one-time flat fee per home at the time of sale would go to the city of Pinto. These funds would be used for the greater Pinto area. Pasco Memorial agreed to contract with a firm, on a yearly basis, to provide the necessary services in that wing. The contract would be renewed each year as long as that contractor met the Interfaith Fund’s performance requirements.
The sole sticking point remaining was the question of stringent inventory control. The hospital must have what it needs on hand for the new services it would provide while meeting the Interfaith Fund’s requirements. Pasco Memorial was not large enough to order materials required for things like hip replacement in bulk, and they cannot afford to pay a premium for these materials piecemeal.
After a thorough search of available options and many interviews with other hospitals serving communities similar to Pasco, the CFO at Pasco learned of a company that would deliver inventory items on a regular schedule. The items could be ordered two business days ahead of need and would arrive on time. There was no surcharge for a small quantity and the products were all new, sterile-packaged, and state-of-the-art.
Pasco arranged a pilot program utilizing this just-in-time approach to inventory management for selected items currently in use. Pasco was able to meet the needs of the community while also meeting the requirements set by the Interfaith Fund. Additional products, including those specific to an aging population, will be brought into this procurement/delivery system when the new wing is completed.