AUBURN - After months of uncertainty, and several years of significant losses, the top financial officer at Auburn Memorial Hospital is confident the most troublesome problems are now part of the past.
Skaneateles resident John Baran was born at AMH in 1946. He's now the hospital's chief financial officer, and an official statement of his birth is framed on his office wall. The Baran family has lived in Skaneateles for the past 13 years.
In the past four years, AMH has had $15 million in losses; it filed for bankruptcy in April 2007. But for the year-to-date, there has been an operating gain of close to $500,000.
“So, we have stopped the bleeding. We have stopped the red ink. The very, very good news is operations have turned around,” said Baran, who has been a health-care audit consultant his entire career - a total of more than 30 years experience.
Baran, 61, attended the University of Buffalo and was then in the Air Force for four years. At Washburn University in Topeka, Kansas, Baran earned his accounting degree. He went to work for Ernst & Ernst (now Ernst & Young) in Boston and Albany before relocating to New York City in 1990.
He was an interim CFO at a Long Island medical center for a year before joining another powerhouse accounting firm, Price Waterhouse.
After retiring from Price Waterhouse, Baran was working as an independent contractor for a health-care consulting firm when he was approached in December 2006 about joining AMH's Board of Directors. The interim CFO at the time had just left for a permanent position elsewhere.
In spring 2006, Chicago-based Wellspring Partners was hired to overhaul the day-to-day operations at AMH. The hospital had been suffering from significant losses for the past three year - $3.1 million dollars in 2004, $5.1 million dollars in 2005 and almost $6 million last year. The number of inpatients had also dropped significantly.
Almost all of the bottom-line improvement for the hospital has come through cost reduction, the area Wellspring was hired to get under control.
“Now, what we need to do is growing the top line - increasing volume and increasing revenues. And that's what we're doing, while maintaining this expense base,” Baran said.
The “interim” was recently removed from Baran's title, and “I expect to be here for another year or two.” But Baran does not foresee staying any longer than that, saying he has other interests he and his family want to pursue.
“I want to get through the bankruptcy, and then to make sure everything is stable and on a sure footing going forward,” he said.
Troubling issues
Pensions costs are AMH's biggest financial headache, but a federal aspirin will soon heal the pain.
By the end of 2007, AMH will owe $14 million to the pension plans of current workers and retirees. But that will soon be fully transferred to the federal Pension Benefit Guarantee Corporation (PBGC), a federally guaranteed insurance agency of sorts.
Baran is hopeful the process will be finalized by the end of the month.
Last year, there were serious concerns that the Commission on Health Care Facilities in the 21st Century, known to many as the Berger Commission, might order that AMH be closed.
Although Baran was not on staff when the commission issued its report in Spring 2006, he acknowledges there was significant concern among politicians, staff, and others that AMH could possibly be shut down.
Baran praised the work state Sen. Michael Nozzolio, R-Fayette, and his staff have done to keep AMH open.
One of the commission's recommendations, however, was for AMH's obstetrics unit to be closed. AMH is licensed for 20 OB beds, but it runs much fewer.
Baran said the commission received incorrect data from Wellspring concerning the financial viability of the OB ward, and that with the correct set of figures showing it generates a profit, he's hoping for a reversal of that decision.
“I will admit that incorrect information we provided, so we take responsibility,” Baran said, noting that AMH has submitted an administrative appeal with the NYS Health Department, in conjunction with Nozzolio's office.
“Our argument is two-fold. One, it makes money for us. Two, if you already consider AMH an essential facility, one of the first thing that hospital does is OB. Where are mothers going to go? It just didn't make any sense,” he said.
Community necessity
AMH admitted its first patient in 1880, and “its going to be here another 128 years. A community of this size, absolutely, positively, has to have a hospital. Particularly when the next closest hospital (Community General) is 23 miles away,” Baran said.
There has, however, been significant downsizing over the years. AMH used to be state-certified for 220 beds, but that figure is now 99. The averages census at AMH shows there are between 60 to 75 inpatients each day, a number that requires a certification of close to 100 beds.
“We're never going to be that size again. At best, we'll be 60 to 70 beds,” Baran said. “But we presently do a very good job with orthopedics, EMT, internal medicine, diabetes. We're never going to be the place you go to if you need open-heart surgery or specialized cancer treatment. but we can provide a group of services that's absolutely essential to this community.”
Wellspring cut about 90 staff, and the total number of employees is now around 800, which still makes AMH the largest employer in Cayuga County. Baran admits staff morale was low - not only because of the job cuts, but due to uncertainty and the prior management team having left.
“It's clear to everyone, and I think we have good communication with our staff, is that we've hit the bottom. We're not going any further down. Financially, we have turned it around. We don't have losses, we have gains,” Baran said.
Revenue dropped earlier in this decade when some physicians retired, and others went on to greener pastures at other hospitals.
“There was going to be no quick turnaround in revenue. So, if the revenue drops, then you've got to drop the expenses to match it. And it wasn't done in '04, it wasn't done in '05. Tough choices were delayed, and then we just ran out of cash,” Baran explained. “Unfortunately, some people got hurt, but we still retained 800 jobs.”
Recently, AMH has decided to air commercials its Fingerlakes Weight Loss Program. The amount spent on advertising brings in a “significant amount of volume,” Baran said, adding that it's turned out to be money very well spent.
New and modern
To attract physicians, and retain those already there, AMH is going forward with ambitious new capital improvement projects.
In November, AMH received a $4.5 million Heal Phase 2 grant from the state. The AMH Hospital Foundation contributed $2 million, and the remainder will be raised from foundations based in the Auburn area.
Currently, AMH has four operating rooms and two endoscopy rooms. Those will be rebuilt into two surgical rooms with the best equipment available, essential for retaining and attracting the best doctors.
Forty-four semi-private patient rooms are also being reconfigured into around 25 private rooms.
“You don't want three roommates sharing (one) bathroom. Anyone who builds a new hospital today, it's all private rooms,” Baran said.
The interior workings of the aging plant will also be affected - the 40-year-old boilers will be replaced, along with new air handling and air conditioning systems.
The renovation projects must be completed by February 2009 to comply with the guidelines of the Heal Phase 2 grant.
While talking about the difficulties of the past 11 months, it's apparent Baran has relished the challenge. Married to the former Kathleen Hassett of Auburn, Baran was first approached about the CFO job by AMH board member David Smith.
“Auburn is my hometown. I was born in this hospital. My sisters and brothers were born here. Our first child was born here. So, it's a special place,” said Baran, the father of three and grandfather to four. “Spending my entire career in health-care finance, the timing was just absolutely right.”
In the past four years, AMH has had $15 million in losses; it filed for bankruptcy in April 2007. But for the year-to-date, there has been an operating gain of close to $500,000.
“So, we have stopped the bleeding. We have stopped the red ink. The very, very good news is operations have turned around,” said Baran, who has been a health-care audit consultant his entire career - a total of more than 30 years experience.
Baran, 61, attended the University of Buffalo and was then in the Air Force for four years. At Washburn University in Topeka, Kansas, Baran earned his accounting degree. He went to work for Ernst & Ernst (now Ernst & Young) in Boston and Albany before relocating to New York City in 1990.
He was an interim CFO at a Long Island medical center for a year before joining another powerhouse accounting firm, Price Waterhouse.
After retiring from Price Waterhouse, Baran was working as an independent contractor for a health-care consulting firm when he was approached in December 2006 about joining AMH's Board of Directors. The interim CFO at the time had just left for a permanent position elsewhere.
In spring 2006, Chicago-based Wellspring Partners was hired to overhaul the day-to-day operations at AMH. The hospital had been suffering from significant losses for the past three year - $3.1 million dollars in 2004, $5.1 million dollars in 2005 and almost $6 million last year. The number of inpatients had also dropped significantly.
Almost all of the bottom-line improvement for the hospital has come through cost reduction, the area Wellspring was hired to get under control.
“Now, what we need to do is growing the top line - increasing volume and increasing revenues. And that's what we're doing, while maintaining this expense base,” Baran said.
The “interim” was recently removed from Baran's title, and “I expect to be here for another year or two.” But Baran does not foresee staying any longer than that, saying he has other interests he and his family want to pursue.
“I want to get through the bankruptcy, and then to make sure everything is stable and on a sure footing going forward,” he said.
Troubling issues
Pensions costs are AMH's biggest financial headache, but a federal aspirin will soon heal the pain.
By the end of 2007, AMH will owe $14 million to the pension plans of current workers and retirees. But that will soon be fully transferred to the federal Pension Benefit Guarantee Corporation (PBGC), a federally guaranteed insurance agency of sorts.
Baran is hopeful the process will be finalized by the end of the month.
Last year, there were serious concerns that the Commission on Health Care Facilities in the 21st Century, known to many as the Berger Commission, might order that AMH be closed.
Although Baran was not on staff when the commission issued its report in Spring 2006, he acknowledges there was significant concern among politicians, staff, and others that AMH could possibly be shut down.
Baran praised the work state Sen. Michael Nozzolio, R-Fayette, and his staff have done to keep AMH open.
One of the commission's recommendations, however, was for AMH's obstetrics unit to be closed. AMH is licensed for 20 OB beds, but it runs much fewer.
Baran said the commission received incorrect data from Wellspring concerning the financial viability of the OB ward, and that with the correct set of figures showing it generates a profit, he's hoping for a reversal of that decision.
“I will admit that incorrect information we provided, so we take responsibility,” Baran said, noting that AMH has submitted an administrative appeal with the NYS Health Department, in conjunction with Nozzolio's office.
“Our argument is two-fold. One, it makes money for us. Two, if you already consider AMH an essential facility, one of the first thing that hospital does is OB. Where are mothers going to go? It just didn't make any sense,” he said.
Community necessity
AMH admitted its first patient in 1880, and “its going to be here another 128 years. A community of this size, absolutely, positively, has to have a hospital. Particularly when the next closest hospital (Community General) is 23 miles away,” Baran said.
There has, however, been significant downsizing over the years. AMH used to be state-certified for 220 beds, but that figure is now 99. The averages census at AMH shows there are between 60 to 75 inpatients each day, a number that requires a certification of close to 100 beds.
“We're never going to be that size again. At best, we'll be 60 to 70 beds,” Baran said. “But we presently do a very good job with orthopedics, EMT, internal medicine, diabetes. We're never going to be the place you go to if you need open-heart surgery or specialized cancer treatment. but we can provide a group of services that's absolutely essential to this community.”
Wellspring cut about 90 staff, and the total number of employees is now around 800, which still makes AMH the largest employer in Cayuga County. Baran admits staff morale was low - not only because of the job cuts, but due to uncertainty and the prior management team having left.
“It's clear to everyone, and I think we have good communication with our staff, is that we've hit the bottom. We're not going any further down. Financially, we have turned it around. We don't have losses, we have gains,” Baran said.
Revenue dropped earlier in this decade when some physicians retired, and others went on to greener pastures at other hospitals.
“There was going to be no quick turnaround in revenue. So, if the revenue drops, then you've got to drop the expenses to match it. And it wasn't done in '04, it wasn't done in '05. Tough choices were delayed, and then we just ran out of cash,” Baran explained. “Unfortunately, some people got hurt, but we still retained 800 jobs.”
Recently, AMH has decided to air commercials its Fingerlakes Weight Loss Program. The amount spent on advertising brings in a “significant amount of volume,” Baran said, adding that it's turned out to be money very well spent.
New and modern
To attract physicians, and retain those already there, AMH is going forward with ambitious new capital improvement projects.
In November, AMH received a $4.5 million Heal Phase 2 grant from the state. The AMH Hospital Foundation contributed $2 million, and the remainder will be raised from foundations based in the Auburn area.
Currently, AMH has four operating rooms and two endoscopy rooms. Those will be rebuilt into two surgical rooms with the best equipment available, essential for retaining and attracting the best doctors.
Forty-four semi-private patient rooms are also being reconfigured into around 25 private rooms.
“You don't want three roommates sharing (one) bathroom. Anyone who builds a new hospital today, it's all private rooms,” Baran said.
The interior workings of the aging plant will also be affected - the 40-year-old boilers will be replaced, along with new air handling and air conditioning systems.
The renovation projects must be completed by February 2009 to comply with the guidelines of the Heal Phase 2 grant.
While talking about the difficulties of the past 11 months, it's apparent Baran has relished the challenge. Married to the former Kathleen Hassett of Auburn, Baran was first approached about the CFO job by AMH board member David Smith.
“Auburn is my hometown. I was born in this hospital. My sisters and brothers were born here. Our first child was born here. So, it's a special place,” said Baran, the father of three and grandfather to four. “Spending my entire career in health-care finance, the timing was just absolutely right.”
