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Hospital to buy Vero Radiology; finances still issue

STORY BY MEG LAUGHLIN (Week of October 31, 2013)
Photo: CEO Jeff Susi speaks during an IRMC board meeting.

The Indian River Medical Center announced last week that it is buying Vero Radiology Associates and borrowing $20 million to help pay for it.

The announcement immediately triggered new questions on hospital finances, which have been the subject of several meetings in the past two weeks, although a majority of hospital board members now appear to have gained new confidence in the hospital’s financial management.

At the finance committee meeting last week, Hospital District Chairman Tom Spackman expressed concern that in the midst of questions about hospital finances, the hospital is taking on an expense of over $20 million with the purchase of Vero Radiology, along with the new  $32 million Wellness Center and the temporarily-delayed $48 million Cancer Center.

Because these new projects come at a time when the hospital has a $3.5 million budget shortfall and is attempting stringent turn-around measures, Hospital District Trustees, who answer to the taxpayers, are calling on the hospital to slow down new expensive projects until finances are clearly stable and patient care improves at the existing hospital.

Spackman listed some of the areas that need attention as emergency room care, the hospital’s electronic computer system and the day-to-day oversight of hospital operations, which include everything from parking lot maintenance to seeing that there is no trash in the stairwells.

Spackman challenged the hospital board to “take the responsibility to voice objections to expansions until the priorities are right.”

New hospital CFO Greg Gardner countered that the Hospital District has nothing to worry about because the hospital is “in great financial shape” and “rock solid,” after 15 years of leadership by CEO Jeff Susi.

Gardner presented new hospital financial numbers – a regular feature at recent hospital meetings.

The cash-on-hand amount, which was $29 million six weeks ago, according to recently terminated CFO Dan Janicak, changed with new CFO Gardner to $30 million in mid-September and became $36 million with Gardner at last week’s meetings.

Hospital District trustee Trevor Smith, who serves on the hospital finance committee, questioned how unrealized gain could suddenly become cash flow and called the latest set of improved numbers “a paper game.”

Furthermore, the hospital’s 2013 budget shortfall was about $6 million a month ago.  With Gardner, that shortfall decreased to $4.1 million and is now $3.5 million. The improvement came from adding money from the overfunded pension plan, Gardner said at last week’s meeting.

He did not address the effect the purchase of Vero Radiology, with its extensive imaging capabilities, will have on patient volume at the hospital’s own new Wellness Center’s imaging center, which was projected to be a money-maker in a presentation to the Hospital District last year.

Board members Marion Kennedy, Paul Nezi and physician Ted Perry expressed concern at last week’s meetings about the financial stability of the hospital. But Gardner assured them that the latest set of numbers prove that finances are “predictable and stable.”

“Maybe stable is the wrong word to use,” suggested Kennedy.

Several other board members, however, seemed buoyed by Gardner’s optimism, agreed with his assessments and called on the board to move ahead with new projects.

“I know there has been controversy about our finances but I think Greg (Gardner) has put that to rest,” announced board chairman Tom Segura.

Board member Jack Weisbaum agreed: “I’m impressed with Mr. Gardner’s background and forthright assessment ... which should instill confidence that the hospital is on a steady financial path.”

“I’m feeling good about our situation,” Gardner repeated.

A week before, District trustee Trevor Smith had cautioned:  “Saying everything is OK doesn’t make it OK.” But last week, the majority of hospital board members seemed content to focus on the latest set of numbers which appeared to be good news.

Good news for the hospital also came in the form of a presentation at last week’s board meeting from an American Heart Association representative who said that Indian River Medical Center had received recognition from the association for treatment of heart failure, heart attack and strokes.

To get the recognition, IRMC followed the organization’s guidelines for standard levels of care 85 percent of the time.

For heart failure, IRMC complied for over 90 days in the past year.

For heart attacks and stroke treatment, the hospital complied for a year.

More than a thousand hospitals across the US also were recognized, along with over 100 in Florida.

Also last week, the Leapfrog Group – which rates hospitals across the country based on CDC and Medicare data in 26 areas of patient safety (evaluated by doctors at Harvard, Johns Hopkins, Stanford, Vanderbilt and the University of Michigan) gave letter grades to 2,539 hospitals across the country, which basically correspond to school report card grades.

In this area, Sebastian River Medical Center received an A grade. Lawnwood Regional Medical Center received a B, and Indian River Medical Center received a C.