RMCH back in black

By Bill Donovan
Staff Writer

GALLUP — What difference can a year and a new chief executive officer make in the operation of a hospital?

Quite a bit, it seems.

After two years of being in the red to the tune of more than $16 million, Rehoboth McKinley Christian Hospital rebounded last year to make a small profit of $546,258.

For Fiscal Year 2005, which ended August 31, 2006, the hospital earned $67.7 million, a record, as compared to spending $67,163,000.

In the spring of 2006, when Chuck Wright took over as CEO of the hospital, there were probably few people who thought it possible to have a profitable year. But Wright took a number of steps, including laying off several employees making more than $100,000 a year, to bring the expenses down.

Wright said Monday that the 990s the forms the hospital has to fill out for the federal government each year as a non-profit organization - show that the hospital was taking steps even during that year to bring the costs down.

The hospital is now in good financial shape, he said, with more than $3 million in the bank.

The 990s, however, don't tell the whole story.

For example, the person with the highest salary during FY 05 was Bernice Brewer, the vice president for patient care, who made about $115,000 the year before.

She earned $160,000 in FY 05, but a good portion of that was her severance package, as she was one of the vice presidents who were laid off due to budget cuts.

There is also no mention of David Balzer, the former CEO of the hospital, in the FY 05 report, even though sources indicate he made the most money of anyone that year. Just how much he made is still uncertain, since hospital officials are still keeping just how much of a buyout the hospital's board gave him after he was fired confidential.

There have been some reports that his total compensation is in the $600,000 range, payable over three years, which would mean that during FY 05, he probably earned between $250,000 and $300,000, which includes his salary and his first buyout payment of about $200,000.

A telling figure in the FY 05 report was how many employees at the hospital made $50,000 or more.

For the past seven years, that figure had been climbing annually - going from 176 to 203 from FY 03 to FY 04. By the end of FY 05, however, that number was down to 197.

The latest report also shows that the hospital continues to rely on outside agencies to find the staff it needs to operate the hospital. In FY 05, the top five contractors, all providing staffing, earned more than $1.4 million in fees. The biggest contractor was the UNM School of Medicine, which received payments of more than $390,000 during the year.

Even the medical staff seems to have been affected by the attempts to reduce cost.

While all five of the top paid doctors in FY 05 earned more than $250,000 a year(see chart on page 2), the amounts paid showed a small decline from the previous year.

Salaries continued to be the biggest expense of the year, with the hospital paying out some $37 million, including benefits and taxes. The next biggest expense was supplies, which cost just more than $6.8 million.