There are great benefits in terms of overall health care costs and the chances for a more complete recovery, by getting patients out of Dartmouth Hitchcock Medical Center or some similar hospital, and up to Crotched Mountain. But the current reimbursement system does not allow Crotched Mountain to bill at a rate similar to the hospital. Instead it reimburses Crotched Mountain at a standard rate even though the patients now arrive in worse shape and require more intense and specialized care. “Kids are transferred directly from the ICU to Crotched Mountain Children’s Hospital,” Shumway states. “The acuity of all our incoming patients has greatly increased.”
Looking ahead over the next few years, Shumway and Crotched Mountain face two big challenges. The first is staffing. With a nursing shortage across the country it is hard to attract and retain high quality staff, especially in certain jobs. Crotched Mountain offers a nice package of benefits and its salaries are competitive. But as Shumway admits, this is hard work and as a residential facility one needs to staff it twenty four hours a day, seven days a week. In addition, because of Crotched Mountain’s reputation and training program, employees find that they have a wealth of opportunities if they choose to leave. “Our turnover is in the high twenties which is in line with the industry,” Shumway explains, “but turnover is costly and the quality of our care suffers.”
The second big challenge is financial. As indicated earlier, Crotched Mountain has gone through the process of adding revenues and cutting costs. Shumway and his management team believe that they are currently running about as efficiently as they can. A big part of the problem is the reimbursement system. Compared with other states, New Hampshire reimburses at a lower rate. Crotched Mountain has survived because it has an endowment and also uses its annual fund raising to close the gap between what it costs to provide services and the amount of reimbursement it receives from the Government, insurance companies and private payers. But the gap between costs and reimbursements seems to be growing, especially because the State of New Hampshire and the Federal Government face budget deficits (See Exhibit 2, article from Concord Monitor). And the clients that Crotched Mountain serves will continue to need ever more intensive services.
As he looked at the financial statements, it was clear to Shumway that there was no quick or easy “technical fixes”. He wished there were an untapped revenue source like the Medicaid funds he had uncovered for the State of New Hampshire, but so far the best he could do was make marginal improvements in the billing system. Shumway also knew that neither he, the staff nor the board would allow Crotched Mountain to deliver less than high quality care. It had always been a place where people took pride in doing things no one else could do, and that was not something Shumway wanted to change.
Tuck School of Business at Dartmouth