Statement of Operations

The Hospital continues to operate in a very challenging environment of external change as the continuing impact of the Affordable Care Act is realized, and federal and state governments struggle with financial challenges under the Medicare and Medicaid programs.

However, we continue to move forward with significant investments in patient safety and quality initiatives at Natchaug, collaborating with our Hartford HealthCare partners to build a seamless system of high quality, coordinated care at the lowest possible cost.

We ended the year with overall volume decline of 0.3 percent from the prior year. This is the second year in a row that we have seen volume declines from the preceding period. We saw a slight decline in our inpatient volume. Our residential girls program saw a larger 8.3 percent decline year over year. Our partial hospital and intensive outpatient levels of care saw modest increases in volume. We saw a decline of 1.2 percent from prior year levels in our school programs, a continuing trend. We continue to experience pressure on our higher margin programs, slower growth in our ambulatory services and significant cost pressures on inpatient care. In the face of these challenges, we ended the year with a $554,000 operating margin, a decrease of $460,000 from the prior year’s performance and $600,000 below our operating plan of $1,154,000.

The average daily number of patients in the hospital was 51.3, a decrease of 1.2 percent from the prior year. We operated at 90% of capacity each year.

The Journey House program had an average daily census of 10.8 residents. The census during the last six months of the year continued to decline further presenting a significant challenge.

The Hospital’s ambulatory programs provided care for an average daily census of 238 clients, an increase of 3.1 percent from the prior year.

We saw a 10.4% decrease in services provided in our in-home service programs.

Our school programs provided education to an average of 158 students each day.

Natchaug is continuing its strategy of investing in resources to drive quality and patient experience metrics to higher levels and to work collaboratively across the Hartford HealthCare Behavioral Health Network to expand services into areas of need as well as integrate best practices. We continue to work aggressively on reducing the cost structure of Natchaug in the face of increasing care management, federal and state reimbursement constraints and slowing managed care rate increases.

During the year we implemented the PeopleSoft technology platform to standardize supply chain activity, treasury services, and financial reporting. We also added the epic electronic medical record, so that there will be a single electronic health record across all HHC entities in order to enhance the client experience, coordinate care and drive improved outcomes. Throughout the year we trained all of our employees in our HHC Leadership Behavior program and continue to drive results through our H3W workgroups. During the latter part of the year we began initial training of our senior leaders in Lean Management techniques in preparation for the roll-out of a system-wide program of daily management across our entities over the next couple of years.

Natchaug continues to fare well in an extended period of change within the healthcare industry and in the face of growing need in the communities we serve. We have implemented many strategies aimed at transforming our operation to succeed well into the future. Our strategies to improve quality and patient experience will position us well in the new era of healthcare reimbursement based upon results rather than volume.  Our employees are integral to our success in meeting these challenges. We continue to invest in new tools and techniques to support our employees in the hard work that they do.  Our community partners are more important than ever in our ability to serve local needs.  As we face the financial challenges of the nation–wide healthcare transformation, we continue to collaborate with other community providers and leaders.  We are grateful for the wide support we have in implementing our plan and remain optimistic that we can continue to meet the needs of those we serve.