The Wrangell Medical Center Board of Directors voted 7-0 Jan. 15 to approve the hospital’s 2014 budget.
Budget figures project the hospital will take in $9,610,679 gross revenue in the coming
fiscal year, while expending $8,763,556 in operating expenses, leaving a positive cash flow of $847,123 at the end of the present fiscal year. This is the second-highest cash flow in seven years, trailing only 2009’s $1,066,371, according to figures provided by hospital Chief Financial Officer Dana Strong.
Revenues are projected to increase 4.9 percent — $457, 651 — over the previous year, while Strong projects expenses will increase 2 percent, or $177,566.
The bulk of the revenue comes from Inpatient and Outpatient Acute care, projected to be $6,646,914 for the coming year. Of those, the largest revenue producers are the medical center’s lab, projected to bring in more than $1.7 million in revenue to about $500,000 in expenses in 2014, and the emergency room, which brings in $700,000 revenue against about $370,000 in expenses.
Long-term care, projected to bring in almost $2.8 million in revenue 2014 against about $1 million in operating expenses, is the largest revenue line for the hospital.
Revenue-producing departments like the lab offset expenses generated by other account headings, like administration, which generates no revenue but is projected to cost $2,268,776 in 2014.
The largest projected expenditure is in salary and benefits, projected to be $4,897,641 in the coming year, or roughly 53 percent of the total hospital expenses.
The lateness of the budget – most budgeting is done before the target year begins – stems from a transition in financial management. The former CFO Garth Hamblin departed in August. Strong arrived less than three weeks later, in the middle of an annual audit, a Medicare cost report, and the transition to the new
in-house physical therapy department, which took up the lion’s share of his early time in the position, said CEO Marla Sanger.
“When it got to be the period of time when he (Hamblin) was thinking of and kind of making plans to leave, but didn’t necessarily know yet, there were a lot of things which required
financial attention,” she said. “I think Garth just ran out of time, and because he had other things he was trying to address, it just didn’t get done.”
For a period of time in 2014, officials used the 2013 budget as a template for operations expenses, Sanger said.
“This has happened other places I’ve worked, too, where — if you don’t have a budget that you’re ready to implement — you can, unless something dramatically different happens, you can function within the parameters of the existing
budget,” she said. “It’s a tool, and it is a helpful tool. We continue to always treat it as we would, budget or no, to be conscientious about cost and things like that.”
Budgeting for the 2015 year is set to start in May, Strong told the board.
“As you well know, this
budget should have been done eons ago, and I inherited it,” he said. “We’re going to be
revisiting this whole process very soon and on time this time.”
“I’m just kinda viewing this more as a planning tool than anything at this point,” he added.
Hospital board members questioned a drop-off in charity and bad debt between 2012 and 2013. During this period, charity and bad debt appear to decrease from $2,245,868 to $345,938 – or 85 percent — though that amount is actually the result of a bookkeeping change from an audit conducted earlier this year, Strong told the board.
Budgets are typically
flexible, Wilson told the board.
“I would just point out that a budget is always an estimate of what you plan to do for the year,” he said. “It is never set in concrete. You could always change your budget, and for the most part in my experience, budgets do change from time-to-time.”
The hospital should move in the direction of acquiring more capital equipment, which could serve to generate additional revenues, said board vice
president Bernie Massin.
“I was looking at the capital requests, and I see we got a bunch of stuff here … and they all look like replacement stuff,” he said. “I would like us to do something else to add to this. It doesn’t have to be this year, but maybe next year. I would like us to buy one piece of
equipment we can do billable hours against, as long as it pays for itself, just so we can keep expanding the hospital.”
“It just brings more income to us,” he said.
The budget now heads to the Jan. 28 borough assembly meeting for approval.
The board also voted 6-0 to approve the Wrangell Medical Center Compliance Plan. The 20-page document lists federal and state laws the Medical Center must adhere to, and describes in broad strokes the process by which hospital staff report issues of non-compliance to the newly-created position of compliance officer. CEO Marla Sanger identified CFO Strong as the compliance officer.
Wilson’s vote wasn’t recorded because of an issue with the teleconference.
The hospital also heard an update on ongoing efforts by the medical staff to seek a Level IV trauma certification for the hospital, delivered by Greg and Laura Salard.
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