Silver Hill Hospital in New Canaan, one of only a handful of private, free-standing, not-for-profit psychiatric hospitals left in the nation, is gearing up to celebrate its 75th anniversary in December ”“ an anniversary it almost didn”™t survive long enough to make.
“All hospitals have struggled with the transition to managed care, and we did too,” said Dr. Sigurd Ackerman, Silver Hill”™s president and medical director. “By the end of the 1990s it was clear we had to do some rethinking about how we were going to handle ourselves.”
Before the advent of managed care, health-care insurance generally paid for recommended treatment at psychiatric facilities, Ackerman said. Under managed care, however, “insurers began to say, ”˜You can recommend it but it doesn”™t mean we”™re going to pay for it.”™ Before, someone might have a three-week stay fully covered based on cost. With managed care, an insurance company might authorize one week at rates that are less than cost.”
But by the early part of this decade, the 129-bed Silver Hill “began to lose a fair amount of money, and by the end of 2003, our revenues were 15 percent or 16 percent less than expenses,” he said. “We had to fix that.” Usually, Ackerman said, there is only one recourse ”“ “to cut costs and make them equal to what we are getting paid for a day of service.” The challenge was to do that without cutting service as well.
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Identify opportunities
In 2003, Ackerman was asked by the Silver Hill board if he would be interested in leaving his Manhattan practice to head the hospital. “I wasn”™t,” he said. The board persisted and Ackerman visited Silver Hill. “I liked the place, and thought it had huge potential,” he said. “They”™ve done wonderful work here over many years, they have a wonderful staff and the level of care was very high. I felt like there was a lot of opportunity here.”
Before he opened his New York City practice, Ackerman had been president and chief executive officer of the 750-bed St. Luke”™s Hospital in Manhattan. “That was a challenge,” he said of St. Luke”™s financial struggles, “but it was a good background for coming here.”
Silver Hills”™ red ink presented a challenge for Ackerman, but a challenge he thought could be met. “I”™m pretty much straight forward about this stuff, nuts and bolts and back to basics,” he said. “The first two things I tried to do was recruit senior people with whom I would work and, along with that, try to identify opportunities to improve the product, basically. We provide services, and there are always ways to improve that.”
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What made Silver Hill different, he said, was that “we”™re a hospital, not a rehab center and, secondly, we”™ve managed over the years to maintain this physical setting for longer-term programs, inpatient services and long-term residential programs.”
Silver Hill, with its 15 buildings ”“ most of them converted single-family houses ”“ began 75 years ago in a 1914 farmhouse on 62 acres of land, providing psychiatric services mostly for wealthy patients. “Families with a family member who was mentally ill preferred to have them out of site and out of mind,” he said, “and out in the country was a good place.” In fact, Silver Hill was called an “inn” when it opened, he said.
“The types of illnesses you could manage in an open setting before the days of medications were less severe than the illnesses we treat today,” he said. “The more severe illnesses went to the locked units in state hospitals.”
Today, he said, “we can treat much more severe illness effectively with medication and better behavioral and psychological treatments and more often than not turn them around.”
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Business and clinical goals
To turn things around financially, Ackerman temporarily eliminated Silver Hill”™s money-losing outpatient services, a strategic decision that allowed the hospital to put more money into longer term inpatient programs. “That provided an important service that is not easy to find somewhere else, and, from our point of view, it was a service that was out from under insurance reimbursement.
“Probably 75 percent of the patients get treated, get discharged and go home, and that”™s covered by insurance,” he said. But “for people who need more, there is an option. And while it”™s true not everybody can elect that option” for longer term in-patient care, many can afford the “out-of-pocket, self-pay residential inpatient programs.”
It turned out, Ackerman said, that the residential program “is very important to many because of their own clinical situation; there is a demand for our program.” The hospital”™s goals, he said, are clinical and business. “Our clinical goal is to provide the best possible service, and our business goal is to at least break even.”
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That business goal happened relatively quickly. “We lost less in 2004 and 2005, and actually broke even in 2006 and should do a little bit better than break even in 2007,” he said. “We spent a lot of time on basic business practices, billing practices, better contracting with insurance (companies), all the basic stuff you have to do from a business point. Between better business practices and offering services that are in demand and can”™t be found elsewhere, and by not depending on insurance reimbursement, we managed to turn it around.”
The turnaround was fairly rapid, Ackerman said, “but it was fundamentally a first-rate hospital to begin with. Yes, we tried to make improvement in what we do, but the level was already high to begin with. I don”™t think we would have been successful as quickly if the hospital wasn”™t as good as it was.”
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