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Palmetto Health to manage KH lab services

Posted: March 27, 2012 5:14 p.m.
Updated: March 28, 2012 5:00 a.m.

By summer, Palmetto Health will be handling all laboratory services for KershawHealth. The KershawHealth Board of Trustees voted unanimously Monday night to enter into a five-year agreement with Palmetto Health to provide day-to-day management of KershawHealth’s primary laboratory on its main campus and its lab at KershawHealth’s Outpatient and Urgent Care Center in Elgin. KershawHealth will continue to manage its lab at the West Wateree Medical Complex.

In a statement released Tuesday morning, KershawHealth Executive Vice President Mike Bunch said the hospital would save $4.5 million over the five-year period. Bunch said that would be accomplished by reducing operating costs and avoiding having to buy equipment in the future. Savings would also be realized by avoiding costs associated with operating the laboratories locally.

“Our collective objective is to maximize the output from lab staff and equipment without sacrificing quality or timeliness,” Bunch said in the release. “Partnering with Palmetto Health accomplishes that by maximizing the economies of scale. In the end, that lowers costs both for us and Palmetto Health.”

KershawHealth Vice President of Marketing and Community Development Joseph Bruce said KershawHealth will pay Palmetto Health $3.8 million annually to manage the lab. Historically, Bruce said, KershawHealth has spent $4.6 million to operate its labs. The $800,000 annual difference will constitute the $4.5 million total savings during the five-year period.

KershawHealth processes approximately 720,000 tests each year, compared to Palmetto Health’s approximately 7 million annual lab tests.

One of the largest effects of the partnership will be on laboratory employees. KershawHealth lab staff will, ultimately, become Palmetto Health employees. KershawHealth officials said a “careful analysis” of lab staffing needs would be conducted during the next three to four months as the transition takes place.

“Until we have gone through the initial assessment period, it is not possible to know what impact this initiative will have on staffing levels,” Bruce said.

However, Bruce confirmed the position of KershawHealth laboratory director is being eliminated immediately, since that position already exists at Palmetto Health.

Most positions will be maintained at KershawHealth lab facilities to perform what the hospital called “rapid response/stat” labs. However, some positions might be consolidated to a new centralized lab facility Palmetto Health is creating in Columbia.

Examples of tests that will continue to be performed at KershawHealth include blood counts, and urine and electrolyte testing. Examples of tests that would likely be sent to Columbia include hepatitis, non-urgent viral and various immunology tests.

As part of creating the new centralized lab, Palmetto Health will continue to maintain on-site labs at its Richland and Baptist locations.

Debbie Tapley, Palmetto Health’s vice president of clinic support operations, explained how the centralized lab will benefit their health care system.

“We are implementing the centralized laboratory services model across the Palmetto Health system,” Tapley said in the press release. “The new model will significantly reduce the cost per lab test by centralizing routine tests in one location, therefore decreasing the amount of equipment and resources required. In turn, this will allow the in-house hospital labs to deliver urgent test results even faster by solely performing these critical tests on site.”

Tapley said the centralized model has been used successfully at other hospitals across the country and would be a “win-win” for both KershawHealth and Palmetto Health patients.

Dr. Tallulah Holmstrom, a KershawHealth trustee, voted to authorize the agreement Monday night, but expressed concerns over the timing.

“I think collaboration is a noble idea, but I would have preferred to delay until Palmetto completed this major transformation,” Holmstrom said of the centralized lab project.

Board Chairman Jody Brazell, however, pointed out that the two health care systems have been discussing the laboratory services idea for more than a year.

“I believe it’s one of the better things to help preserve our mission of providing health care for this community,” Brazell said; in the press release, he added, “Finding innovative ways to reduce costs while maintaining, and in many cases improving, the quality of care will enable us to preserve our hospital’s nearly 100-year-old mission and maintain local control.”

To that point -- local control -- KershawHealth and Palmetto Health officials both said the letter of intent spelling out the agreement was “explicit in its statement each health care system would maintain its independence and governance by its local board.”

Like KershawHealth, Palmetto Health is a non-profit health care organization. It includes Baptist, Richland, Heart, Children’s and Baptist Easley hospitals; as well as its Parkridge Convenience Care facility which houses an ambulatory surgery center, diagnostic center and medical office building. Parkridge, near Lake Murray Boulevard, is the site of a future 76-bed hospital slated for late 2013.

KershawHealth officials said that from the patient and physician perspective, the collaboration will maintain the “high level of care KershawHealth has provided in the past and potentially improve the timeliness of results for certain tests.” That doesn’t mean patients must go to Columbia to get certain tests done. Officials said patients will continue to have blood drawn at either the Camden or Elgin facilities. Patients will also continue to get their bills from KershawHealth.

The lab services collaboration is the second to emerge from an agreement between the two non-profit health care systems to explore such opportunities. In August 2011, KershawHealth announced it had contracted with Carolina Care, a private group of Columbia-based emergency physicians, to staff its emergency department. Carolina Care already provides emergency department coverage at Palmetto Health’s Richland and Baptist hospitals, as well as Providence’s main and northeast hospitals.

Bruce said the lab services agreement may be extended after the five years by mutual agreement but there is no automatic renewal clause. He said there is also the possibility KershawHealth could take back management of lab services

In other business Monday:

• Trustee Scott Ziemke, reporting on finances, said the month of February was “improved,” not only compared to January but to February 2011. However, he said, year-to-date finances were still trailing behind Fiscal Year 2011 year-to-date numbers. For the month of February, KershawHealth generated operating and total net income of $1.4 million. Ziemke said the number of days of cash on hand increased to 128, primarily due to bad debt collections; a $450,000 requisition from a loan connected to the hospital’s new boiler room equipment; and a resolution to billing issues.

Bunch said the bad debt setoff amount was about $20,000 higher than expected with additional payments coming in March and April. Bunch also said surgical volumes are still down and mentioned a problem in obtaining certain drugs.

Gloria Keeffe, KershawHealth vice president and chief nursing officer, said the hospital has been experiencing shortages of some drugs.

“But we have been able to substitute,” Keeffe said. “Our suppliers are usually able to warn us ahead of time.”

While she didn’t know of any specific cause, Keeffe said it was probable that there have been production slowdowns at some pharmaceutical plants.

• Trustees voted unanimously to authorize an up to $5.2 lease purchase agreement for MRI equipment and electronic medical records technology, and to refinance prior lease agreements.

• Trustee Dr. Marguerite Carlton reported on activities by the Board Quality Oversight Committee and on KershawHealth’s systemwide quality “dashboard.” Carlton noted that four areas still require improvement: discharge instructions for heart failure patients, providing initial antibiotic selection for pneumonia patients, having 70 percent or more of patients rate KershawHealth a “9” or “10” on satisfaction surveys and having 69 percent or more of patients express a willingness to recommend KershawHealth to others.

• Trustees heard reports on the KershawHealth Foundation and Board of Visitors from Trustees Ernest Witherspoon and Bobby Jones, respectively.

• Bruce reported on a new project being launched in cooperation with the Robert Wood Johnson Foundation, the University of South Carolina and others called the Healthy Kershaw County Initiative. The concept is to create a new legacy in tandem with KershawHealth’s upcoming 2013 centennial with the goal of making Kershaw County the healthiest county in the state and, ultimately, in the top 10 percent of the healthiest counties in America.

• Trustees received an annual safety report from KershawHealth’s Abby Palmer. Highlights included information about a cyclone drill conducted in March 2011, a radiological drill conducted in November 2011, the fact that KershawHealth conducted 56 fire drills during the last year and successfully dealt with four decontamination incidents in 2011 involving 25 patients.

The KershawHealth Board of Trustees meets at 6:30 p.m. on the fourth Monday of each month at the Health Resource Center on Battleship Road in Camden. All meetings are open to the public.

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