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KershawHealth still facing financial challenges

Posted: October 29, 2010 4:09 p.m.
Updated: November 1, 2010 5:00 a.m.

“September was not a good month.”

That’s what George Corbin, a member of the KershawHealth Board of Trustees and the board’s finance committee chairman, told his fellow trustees at a board meeting Oct. 25.

“The last three months have been very disappointing, but there have been a lot of non-recurring expenses and bad debt,” Corbin said. “The bottom line: we’ve had a break-even year.”

The 2010 fiscal year ended Sunday.

Considering the poor economy, said Corbin, breaking even was a good thing.

Corbin said expenses associated with staffing the Elgin outpatient and urgent care center, which opened last summer, dramatically increased salary expenses. He said there has also been a shift in KershawHealth’s “payer mix,” a term used to describe the different ways people pay for health care services, in a way that has affected the hospital’s bottom line.

For September, KershawHealth experienced an operating loss of $718,000 compared to a budgeted operating loss of only $156,000. The hospital turned a $551,000 profit in terms of operating income in September 2009. Total net loss was $296,000 for the month, compared to a budgeted loss of only $56,000 and September 2009’s net income of $697,000.

For Fiscal Year 2010, Corbin reported an unaudited operating loss of $1.9 million, compared to a projected operating income of $926,000. Fiscal Year 2009 ended with an operating profit of $2.5 million.

Despite the losses, KershawHealth did turn total net profit of $271,000 for the fiscal year. However, KershawHealth had projected making a total net profit of $2.1 million; it had earned $3.8 million in income at the end of Fiscal Year 2009.

Trustee Tallulah Holmstrom noted that, deeper in the report, Kraemer Women’s Center had been listed as contributing to higher operating expenses for the third month in a row.

“That purchase was planned out for more than a year,” said Holmstrom. “Is this an expense or revenue issue?”

Corbin said it was revenue issues, explaining that one of the practice’s physicians had only recently come on to the staff.

Newly installed Chairman Jody Brazell said he isn’t surprised expenses are over budget.

“There have been changes in the budget since we added Kraemer,” said Brazell. “It has a lot to do with the way the calendar year goes versus the way the fiscal year goes. Are we over budget? Technically. Is it going the way I think it should go? Yes, I think so.”

Operating expenses for September, excluding depreciation and interest, was $210,000, or 2 percent above the prior fiscal year and 7 percent over budget. Physician salaries and total benefits were 5 percent over September 2009. Other expenses were at prior year levels, but 28 percent over budget.

Inpatient volumes for September were 8 percent above budget and 11 percent over September 2009. However, all patient inpatient and observation volumes combined were 1 percent below September 2009. Emergency department visits were 12 percent below September 2009 and 16 percent under budget. Elgin outpatient volumes were 24 percent under budget.

Year to date inpatient volumes were 7 percent below the prior fiscal year and 10 percent below budget. Surgeries and emergency department visits were both under budget. However, total outpatient volumes were up 11 percent over the prior year.

In his own report to the board, President and CEO Donnie Weeks acknowledged that finances are considered the No. 1 issue facing health care executives for the second year in a row. Weeks recently attended an advanced health care finance seminar with 40 other hospital CEOs.

Weeks said he has brought back some “best practices” tools to help better monitor the hospital’s financial health. They include improvements to productivity systems, supply chains and revenue cycles.

“A number of these ideas were from for-profit hospitals, but we want to stay locally controlled and non-profit,” said Weeks. “It’s very apparent the industry is challenged. More hospitals are being downgraded by Moody’s. It’s a bleak outlook and will require more intense oversight. We don’t want to impact patient care, but provide that care at the cheapest rate and more efficiently.”

Weeks said Vice President and COO Mike Bunch will be attending a similar seminar later this year.

Other announcements from Weeks included:

* Kershaw County recently provided $150,000 for the purchase of a new ambulance.

* Weeks announced that Vice President and CFO Don Trippell will be taking on compliance duties while Compliance Officer Debra Morris will be transitioning out of compliance and into a financial role.

* Weeks and Brazell both recognized Dr. Ed Gill, who was appearing at the meeting in his newly elected role as KershawHealth’s chief of staff. Weeks noted that Gill had served in that capacity some 15 years ago. McGill agreed things are a little different today than they were then.

* In an executive session, trustees received a medical staff report and discussed a legal matter, personnel matter and three contractual matters. Following the executive session, trustees voted to approve additions to the medical staff, including seven physicians from Columbia Nephrology as provisional affiliate members.

The KershawHealth Board of Trustees meets on the fourth Monday of each month at 6:30 p.m. at the Health Resource Center on Battleship Road in Camden. All meetings are open to the public.

(This story has been corrected to reflect the new roles being taken on by Don Trippell and Deborah Morris and to reflect the proper spelling of Ed Gill's name.)


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