CMC stops spending on big project

Coulee Medical Center has put a stop to a project that was bleeding money and caused the hospital to borrow on county warrants, the administrator told the board Monday night.

The medical records project was supposed to cost $1.3 million to integrate the facility’s electronic medical records with the latest software from Meditech, but extra costs not understood when the contract was signed in 2014 kept slipping in every time another nuance was discovered, requiring another third-party software add-on, with 10 to 15 vendors needed.

So far the hospital has spent $1.7 million on it, and if CMC were to continue with the project, another $856,000 would be needed now, and up to about $4 million eventually.

Chief Executive Officer Jonathan Owens, who took the helm of CMC last summer, said his staff likens the result to buying “a car without an engine, brakes or exhaust.”

The hospital had been self-financing the upgrade with its own cash and could have afforded the initial price as understood, Owens said. But the ever-increasing price tag won’t fit for a hospital the size of CMC.

“A hospital this size just can’t incur those types of costs,” Owens told Hospital District 6 commissioners Monday. “We just can’t.”

Commission President Jerry Kennedy noted those costs didn’t include thousands of hours of staff time spent working on the project.

When the project first started, CMC sought financing for it, but didn’t qualify for most methods because it had recently taken a hit from Medicaid, which was back-charging money it had already paid the hospital after a cost adjustment, leading to a $6 million loss on the previous year.

The only financing offered was couched in terms that would have effectively meant paying an interest rate of more than 48 percent, discovered former chief financial officer Paul Babcock, who has resigned, Owens said Tuesday.

Last April, still seeking to finish the project, the hospital district got an OK from Grant County commissioners to spend using warrants, effectively a line of credit from the county for $1.5 million.

Owens said the hospital had pushed past that limit to $2.3 million, concerning the county commissioners and instigating a meeting last week with the treasurer.

Owens said that debt will be back down to $1.6 million next week, and the hospital will recover quickly without the burden of financing the project with cash.

On the up side, he said, staff has discovered much more that can be done with CMC’s existing Meditech records system, although the hospital will have to continue paying licensure fees that would have been gone under the upgrade.

“It’s a lesson learned,” Owens said.

Interim CFO Kelly Hughes reported Monday night that the hospital had suffered a $577,000 loss in September, bringing the year-to-date loss at about $2.9 million, including the $1.7 million spent on the project.

This story has been edited to use the CEO's correct last name.