TOWANDA - While Memorial Hospital's operations were profitable over the past year, the hospital will need to cope in the coming years with a projected 14 percent reduction in payments from Medicare and Medicare, which together provide most of the hospital's revenue, Memorial Hospital officials said at the hospital's annual meeting on Thursday.

"Last year was a good year, although we had some challenges," John Schoonover, chairman of the hospital's board of trustees, said at the meeting, which took place at the hospital in Towanda. "Next year there will be challenges as well, but I have no doubt that we will be able to meet the objectives of our mission statement (which calls for providing quality health care) in a very successful way."

Schoonover outlined some of the hospital's financial successes during the past year, as well as some of the challenges it has faced during that time.

In addition to operating in the black over the past year, the hospital adopted a new health insurance plan for its employees which will save the hospital and its employees money, he said.

In addition, the hospital will be receiving up to $3 million in federal stimulus dollars for the further implementation of electronic health records, Schoonover said.

The hospital received its first installment of over $1 million of the federal stimulus dollars during the past year, he said.

The hospital's allotment of federal stimulus dollars is "a huge amount of money" which will help make patients' records more portable and will help prevent errors that could affect the health of patients, Schoonover said in an interview after the meeting.

The hospital continues to have a problem of patients not paying debts that they owe to the hospital, Schoonover said at the meeting, as he discussed the challenges the hospital has faced over the past year.

"Recruiting doctors is a challenge," he continued. "And we are continuing to work toward having Community Health Associates (the group physician's practice owned by the hospital) be profitable."

A big issue facing the hospital is "the implementation of the Affordable Care Act and how it will impact reimbursements and the financial success of the hospital," Schoonover said.

The implementation of the Affordable Care Act, the health insurance reform legislation that was signed into law in 2010, will impact the amount of revenue the hospital receives from Medicare and Medicaid, Memorial Hospital officials said.

While Medicare and Medicaid together provide 60 percent of Memorial's Hospital's revenue, Memorial Hospital, along with every other hospital in the state, will be facing a projected 14 percent reduction in payments from Medicare and Medicaid, said hospital President Gary Baker and hospital Chief Operating Officer Bill Rohrbach.

The 14 percent reduction will be phased in by 2019, Rohrbach said.

"We'll have to ... work harder and smarter" to address the funding reductions, Baker said. "I think we can do it."

The hospital recently added the Nurse Family Partnership to its services, Baker said. The Nurse Family Partnership is a social service program for young mothers, he said. The local Nurse Family Partnership office moved to the hospital several weeks ago, hospital spokesman Jeff Russell said.

"I think the Nurse Family Partnership is a very good program for ... mothers with their first babies" which acquaints them with their new responsibilities as mothers, Baker said.

Under the Nurse Family Partnership, a nurse begins to meet with the mother at her home before she delivers and continues to meet with her following the delivery, until the baby is two years old, Russell said.

The nurse serves as mentor to the mother, and also monitors the health of the mother and her baby, he said. The nurse, among other things, helps the mother to have a healthy pregnancy, and coaches her on child development, according to the Nurse Family Partnership's website. The Nurse Family Partnership is a free, voluntary program for mothers and their children.

In addition, the hospital recently added vision therapy to its services, said Dr. Joseph Cama, the outgoing president of the hospital's medical staff.

Vision therapy improves a person's vision through a regimented therapeutic program, he said.

Schoonover briefly discussed the recent ground breaking for the addition onto the hospital's Personal Care Home building, which, in addition to increasing the number of beds in the Personal Care Home, will include physician offices for Community Health Associates.

"It (the addition) will be great for the hospital financially, and also in terms of services," Schoonover said.

"We continue to work to grow Community Health Associates," he added.

Marguerite Shaner, president of Memorial Hospital Auxiliary, said the hospital hopes to expand the hours of its gift shop to include Saturday and Sunday hours.

The hospital hopes to recruit Towanda High School students to work in the gift shop on weekends, and they would get credit for community service for their senior projects, she said.

Currently, the gift shop is open 10 a.m. to 4 p.m., Monday through Friday.

At the meeting, two new trustees were elected to the hospital's board of trustees: Towanda schools Superintendent Steve Gobble and Larry Huber, who is the chief financial officer of the Williams Oil Company.

Bill McNett is stepping down as a trustee after nearly 25 years of service on the board. McNett said he is resigning because of his duties as a caregiver to his wife, who has health problems.

Re-elected on Thursday to the board of trustees were Ray DePaola, Hank Dunn, Brian Emick, Lewis Hope, Jim Parks, Jim Rodenhizer, and Tom Thompson.

Shaner said she thought the auxiliary had it its best year ever during the past year, in terms of raising money for the hospital.

The auxiliary had $128,800 in income over the past year, earning a profit of $103,800, she said.

The auxiliary donated $112,425 to the hospital over the past year, she said.

The newly elected president of the hospital's medical staff is Dr. James Ferenzi.

James Loewenstein can be reached at (570) 265-1633; or email: