Cottage healthcare umbrella opens

BY COLBY FRAZIER
DAILY SOUND STAFF WRITER

Cottage Health System expanded its healthcare umbrella yesterday when officials announced the acquisition of the 52-year-old, independent Rehabilitation Institute at Santa Barbara.
The decision to seek out an agreement with Cottage was announced in April and was done in the face of nearly a decade of what Melinda Staveley, former CEO of the Rehabilitation Institute called a “precarious operating margin.”


“The balance between what was coming in and going out was getting wider and wider in a negative fashion,” Staveley said. “The services [provided by the Rehabilitation Institute] are going to remain and be sustained in the community. Cottage is making that possible.”
The merger stands as a local example of the volatile nature of the insurance and health care industry throughout the nation, which has drastically whittled its coverage while simultaneously increasing its prices.
This trend has not only been perpetuated by by private insurance providers, but by federal and state providers like Medicaid and Medi-Cal as well.
The result for health care providers like the Rehabilitation Institute, is a decrease in patients who qualify for such care under their insurance policies, which translates into a loss of money, Staveley said.
But further compounding the issue, she said, is when people in need of rehabilitation do manage to qualify, their time spent at such a facility is shortened and the amount of money paid by insurance companies for that time is cut as well.
Staveley said average daily patient counts from years past showed 32 patients were in in the institute each day. Now she said the number is 21.
Staveley, who has been in the rehabilitation business for 25 years and has a new title of vice president of Rehabilitation Institute at Santa Barbara Cottage Hospital, said when she first entered the business, the average stay in a rehabilitation facility for a person suffering from paraplegia (paralysis of the legs and lower body), was four months. She said the average stay for a person with such an injury today is just over two weeks.
But despite the myriad issues facing small health care providers, the Rehabilitation Institute is also an example of a lucky case.
If the Rehabilitation Institute didn’t happen to be in Santa Barbara, where residents have buoyed its finances for years with donations, and where a financially viable hospital was willing to scoop it up and save its life, it would likely have to close its doors.
Staveley said only seven independent Rehabilitation Institutes currently exist in the country. The rest have either been forced to close, or have associated themselves with larger hospitals.
This won’t be the first time Cottage has swooped in to save the life of fledging health care provider.
In 1995 Cottage took over the Santa Ynez Valley Cottage Hospital and one year later did the same with what is now Goleta Valley Cottage Hospital.
As a result of Cottage taking over the operation of the two smaller hospitals, Cottage Hospital Board Chair J. Robert Andrews said both are now financially secure.
The undertones of a shaken industry don’t seem to bother either side.
“We have always valued the tremendous work performed by the medical rehabilitation team of physicians, therapists, specialized nurses, psychologists and neuropsychologists at the Rehabilitation Institute,” said Ron Werft, president and CEO of Cottage Health System. “We are very pleased to be able to continue these important services in our community.”
Staveley said part of Cottage’s blueprint for bringing the Rehabilitation Institute back into the black will be to eliminate duplicate departments. As an example, Staveley said the Rehabilitation Institute will no longer need its own accounting department, CEO or director of quality management. These roles will be assumed by the existing departments and administrative positions within Cottage.
As a result, some jobs will be lost.
Staveley said Cottage has hired 156 staff members at the Rehabilitation Institute to remain there, while about 25 are still waiting for positions. A statement released by Cottage yesterday said the 25 former employees of the Rehabilitation Institute have been told they could apply for existing positions throughout Cottage Health System.
Staveley said the transfer of power did not and will not effect the patients or clinical staff.
“None of our patients were discharged,” Staveley said. “They’re all here with us. All of the direct patient care employees are secure in positions.”
The 38-bed rehabilitation Institute is located at 2415 De la Vina Street. Staveley said the purchase was an “asset agreement,” and as such, Cottage purchased the building, which was owned by the Rehabilitation Institute.