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Outgoing KH board members say ‘good-bye’ as they approve budget

Posted: September 28, 2012 6:21 p.m.
Updated: October 1, 2012 5:00 a.m.

At a time when healthcare is going through so many changes itself, KershawHealth’s board of trustees is seeing a change as well. Sept. 24, the board celebrated the tenure of four outgoing members: Chairman Jody Brazell and trustees Dr. Marguerite Carlton, Carolyn Hampton and Earnest Witherspoon. Each completed their full six-year terms of, as KershawHealth President and CEO Donnie Weeks put it, “faithful and productive service.”

Weeks noted that each brought a wealth of experience to the board.

“Each of these individuals, in his or her own way, represents the best that Kershaw County has to offer,” Weeks said. “To their service on the board, they have brought an enduring commitment to KershawHealth’s mission, a willingness to ‘dig in’ to the hard work of understanding a complex business, an openness to innovation, and a genuine spirit of congeniality. They have given freely of their time, expertise, knowledge, and good old-fashioned common sense.”

Weeks highlighted KershawHealth accomplishments during the six years these trustees served on the board:

• Generated more than $600 million in cash, without using any property tax money despite being a public hospital.

• Reinvested $36 million in capital projects.

• Opened the Elgin Outpatient and Urgent Care Center

• Formed a board Quality Committee, under Carlton, leading to “quantifiable improvements” in patient care quality.

Weeks said these accomplishments and more had been achieved during one of the severest recessions in American history.

“We at KershawHealth, and indeed all the citizens of Kershaw County, owe these trustees a debt of gratitude for what they have helped KershawHealth accomplish,” Weeks said.

Brazell welcomed two of the four new trustees who officially begin their terms today, thanking them for their willingness to serve. NBSC’s Karen Eckford and ALPHA Center Executive Director Paul Napper attended the Sept. 24 meeting as guests. New trustees Steve Holliday Jr. and Derial Ogburn were unable to attend.

Brazell then turned his attention to what it has meant to him to be a trustee and chairman.

“I want to thank county council for appointing us. It’s been a privilege to serve on the board and as chair,” he said. “I learned more about healthcare than I ever thought I’d need to know. To anyone who goes away from here to get healthcare, I say ‘stop it.’ I hope those who remain on the board, and those coming on, keep in mind that their decisions affect this hospital, community and patients.”

And then it was time to get down to work, with finances uppermost on trustees’ minds, looking at both August’s financials and a vote on the Fiscal Year 2013 budget.

“August was not a good month,” Board Finance Committee Chair George Corbin said. “In fact it was the worst month of the (fiscal) year.”

He reported that charity and bad debt write off were $600,000 above any given month during the fiscal year, which ended Sunday. Other negative impacts included continuing lower volumes and a $133,000 increase in employee health insurance claims from August 2011.

KershawHealth Vice President and CFO/COO Mike Bunch reported an operating loss of $989,000, compared to a loss of $145,000 in August 2011 and an even smaller projected loss of only $68,000. Fiscal Year to date as of August 31, Bunch reported $391,400 in losses compared to a operating income at this time last year of $2.87 million -- an approximately 113.5 percent negative change. KershawHealth had hoped to earn $2.83 million by the end of August, according to its original budget projections.

Bunch noted that, for the month of August, admissions and surgeries continued to “trend below prior year and budget.” The bright spot: emergency department volumes and revenue increased above both August 2011 and budget projections.

Adding to Corbin’s comments, Bunch said combined deductions for bad debt and charity totaled $4.4 million, with six bad debt accounts totaling $200,000, and 17 charity accounts totaling $601,000. Trustee Dr. Tallulah Holmstrom commented that it appeared the hospital was “caught off guard” by the numbers. Bunch said there was no way to know until the end of the month, but didn’t anticipate charity and bad debt to be as high in September.

Weeks noted that, in July, Fitch reaffirmed KershawHealth’s BBB+ rating and “stable” outlook.

“However, as we’ve anticipated healthcare challenges, we’ve made adjustments,” Weeks said, mentioning KershawHealth’s partnership with Palmetto Health and the closing of an operating room. “If we only look at what we’ve done in the past, we won’t move forward. We’ve had to shift from trying to staff for the highest anticipated levels to the lowest.”

With that in mind, Weeks said trustees should soon receive the hospital’s latest medical staff development plan. He said KershawHealth would use that plan to recruit new physicians to fill gaps in services.

“We’re just in the throes of a massive shift in healthcare, but we have a very capable leadership that can adjust to whatever happens,” Weeks said.

As for the operating budget, KershawHealth is projecting $109.71 million in net operating revenue for FY 2013, a 3.2 percent increase from the fiscal year just ended. It expects to spend $108.99 million, for a projected net operating income of $726,251 -- a 122.8 percent jump from the $325,901 in net operating income KershawHealth was projecting to make by the end of the 2012 fiscal year.

The budget includes a 5 percent price increase for services. Expenses are projected to increase 2.9 percent overall.

The capital budget calls for $6.7 million across 74 items, compared to $8.07 million during FY 2012 which included the cost of a new MRI unit. One of the largest capital outlays for the coming fiscal year is the $500,000 transformation of the KershawHealth lab into a “stat lab” for those tests needing immediate results. This is being done partially as a result of the Palmetto Health partnership, but Bunch said it is also being done in order to meet College of American Pathology findings.

Holmstrom expressed concern that the lab was being renovated “to do less than what we’re doing now.”

“We have had conversations about this,” Corbin said in response. “We may not have talked about it as well as we could have. In order to keep the certification, we’d have to spend the money anyway.”

Holmstrom said she wished she had understood that better when trustees voted on the Palmetto Health lab partnership.

“I felt like the finance committee took the time to go through this, but that the full board only had one presentation before voting,” she said.

Brazell noted that some of the tests Palmetto Health is now doing were already being outsourced, while Bunch explained that Palmetto Health conducts millions of tests compared to the hundreds of thousands performed at KershawHealth.

“They can do it cheaper,” he said.

The board passed the budget unanimously -- but without Holmstrom and Carlton. They recused themselves on the grounds that, as physicians, they would materially benefit from the budget’s passage.

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