“Basically, break-even through five months.”
This is the “bottom-line” for Three Rivers Health cited by Steve Andrews, vice-president of finance, as he reviewed financial reports for May 2009 during the June meeting of the Three Rivers Health Authority Board Thursday morning (June 25th).
In keeping with projections last month, Three Rivers Health recorded a net loss of more than $37,000 ($37,518) in May, which was nearly $59,000 ($58,654) below budget. For the year-to-date, the hospital is in the black with total net income of just over $2,000 ($2,007). That’s not much, but it’s far better than 2008 when the hospital experienced losses of more than $3.2 million.
Andrews said “volumes continue to be down on the inpatient side” and noted a “shift in the payer mix” on the inpatient side in which Medicaid and Medicare are up at the expense of commercial. He said, “It’s dropped four percent and we’ve seen that on the outpatient side as well and we expect that to continue,” reflecting the fact that there are “more people without insurance” as a result of the current economic downturn.
Matt Chambers, president and CEO, said the hospital has requested another worker from the state to work onsite to process Medicaid applications and such a worker will be in place as soon as the state has one available. Chambers said 1 in 5 people in Michigan are now on Medicaid and the ratio in St. Joseph County is even higher at 1 in 4.
Complicating the matter further is a recent switch by the Department of Human Services statewide to a new information system that has created a backlog of almost 1,200 people in St. Joseph County. Andrews said, “We have some people that are in temporary ‘self-pay status’ because the system can’t get them eligible.”
Andrews and Chambers reported that Medicaid cutbacks proposed by the governor and legislature, if enacted, will mean a loss of “$335,000 in cash taken away from the bottom line going forward for the rest of this year and next year,” a gap that will need to be filled. The amount doesn’t include proposed cuts in Medicare.
According to Chambers, Medicare and Medicaid account for 84 percent of the hospital’s business.
Despite the negative indicators, there were some positive elements to report:
• Andrews said, “June numbers are up. Admissions are up. Surgery is up. And radiology is up. Right now, revenue is projected to be about $600,000 higher than May. Projections are for that to be a positive month based on the normal mix.”
• And a renegotiated contract with United Healthcare will start impacting the hospital in June, resulting in an annual improvement of about $400,000.
For additional insights regarding the hospital’s financial situation and efforts to deal with the challenges, use the following link to hear a post-meeting interview with Matt Chambers (3:28), conducted by Bruce Snook of the River Country Journal: Matt Chambers interview – Finances – 6-25-09
Editor’s Note: This story was updated at 1:30 a.m. 6-26-09 to add the link to the Matt Chambers interview.