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Day Paper, December 18, 2008 - Investments, giving offset revenue deficit as fiscal year closes
 Westerly - The Westerly Hospital ended fiscal 2008 “in dark pink,” with
its finances in significantly better shape than in the previous year
but still with a negative operating margin.
Hospital President Charles Kinney on Wednesday used “dark pink” to
describe the hospital's financial condition as something between “in
the red” of year-end deficits, where it's found itself every year since
fiscal 2003, and that elusive land of “in the black,” where revenues
exceed expenses. He reported on the hospital's finances during the
hospital's annual meeting Wednesday.
The hospital had a $1.1 million deficit on fiscal 2008 revenues of $82
million over expenses, but the deficit was offset by income from
investments, interest and donations. That left the hospital with a
positive year-end balance of $511,500. That compared to the negative
year-end balance of $1.7 million in fiscal 2007, when it had a $5.9
million deficit on revenue of $73 million. In fiscal 2006, the deficit
was $2.5 million.
”This was a remarkable turnaround,” said Kinney.
Substantial growth in revenue from increased inpatient and outpatient
visits, higher reimbursements from insurance companies and aggressive
management of expenses was the main reason for the positive performance
over the past year, he said.
Both of the other hospitals that serve southeastern Connecticut and
southwestern Rhode Island, The William W. Backus Hospital in Norwich
and Lawrence & Memorial Hospital in New London, have also recently
reported positive year-end results for fiscal 2008 despite the economic
downturn. Backus had an $8.62 million operating margin on revenues of
$233 million. L&M saw a $4.2 million operating gain on revenues of
$279 million. Of the three hospitals, Westerly is the smallest, with
125 beds.
Despite the gains made in 2008, Kinney said because of the deepening recession, he's expecting the worst for 2009.
”We're seeing growth in bad debt and charity care,” he said.
Unpaid bills from patients who can't or won't pay, he said, have
increased from $6 million in 2007 to $7.5 million in 2008 and are
projected to be $8.2 million in 2009. Unemployment in Rhode Island
could reach 20 percent next year, he added, leaving more people
uncovered by health insurance.
Two bond rating firms have recently downgraded their ratings for
nonprofit hospitals, he noted, anticipating more unpaid bills and cuts
in Medicaid reimbursements.
”We're forecasting a $2.5 million loss for 2009,” he said.
Jeanne La Chance, chief financial officer and chief operating officer,
said that while the continued deficits are frustrating, they're at a
level that allows the hospital to still have sufficient cash flow to
continue operations.
For the coming year, Kinney said, the hospital will focus on recruiting
new physicians for specific specialties; establishing a center for
women's health; and focusing on raising $1.7 million in donations for
new equipment and other capital expenditures.
Before Kinney's report, Sen. Jack Reed told the hospital's corporators
and board members that he is hopeful about the prospects for health
care reform and that the economic stimulus package President-elect
Obama is expected to introduce will include funds for infrastructure
upgrades at hospitals. He also said he will work to increase Medicaid
reimbursement rates to Rhode Island hospitals.
”We have a health care system that is really showing strains in terms of costs and accessibility and affordability,” he said.
Before Reed's remarks, William McKendree, vice chairman of the hospital
board, said the board has identified two “call to action” issues it
will be urging the Rhode Island governor and legislature to adopt in
2009. The first would help equalize payment for services to hospitals
so that teaching hospitals are no longer paid substantially higher
rates than community hospitals. The second would amend the state's
approval process for new health care equipment and services so that
community hospitals aren't at a disadvantage over other entities.
”The current hospital payment system has resulted in a system of
'haves' and 'have-nots,'” McKendree said. “If community hospitals in
Rhode Island are to survive and remain viable entities, then payment
reform is paramount.”
A possible merger between two of the state's largest teaching
hospitals, Rhode Island Hospital and Women and Infants Hospital, he
added, makes the situation even more urgent for community hospitals
like Westerly.
By Judy Benson
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Source: http://www.theday.com/re.aspx?re=26e63574-1d3b-4ac1-bdb7-6ff070f75d2f
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