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July 11, 2014 10:35:05 AM
An Oktibbeha County Hospital-Regional Medical Center budget projection for Fiscal Year 2014-2015 predicts the hospital will take in less than $1 million in excess of revenue over expenses for the first time in three years.
The hospital projects an overall $839,337.20 in excess of revenue over expenses for the upcoming fiscal year, which begins Oct. 1. It was not immediately clear how debt service factors into the budget as documents show two items -- bond transfer and leases and notes payable -- listed after the operating budget's conclusion as "principal payments" totaling $1.84 million.
The budget projection was made using eight months of operation and states that final numbers will be adjusted to meet cash flow needs and provisions set by Miss. Development Bank and GE Capital financing.
Budgetary documents obtained by The Dispatch showed the hospital's excess over revenues was $1.83 million for FY 2012-2013 and $1.39 million for FY 2013-2014. Operating revenue climbed from $63.57 million in FY 2012-2013 to $68.23, but is predicted to decline to about $66 million.
Salary costs for the upcoming year are projected to drop almost $1.6 million compared to FY 2013-2014's almost-$33.8 million mark.
In October, hospital executives implemented a 5-percent pay cut for employees who earn more than $8.50 an hour and scaled back workers' 80-hour work weeks to 76 hours. The pay cut also applied to salaried workers.
The scale backs were made, OCH CEO Richard Hilton said last year, to offset rising expenses and lower reimbursements for health care services.
OCH CFO Susan Russell said similar personnel moves are not planned for the upcoming fiscal year, but hospital officials will continue to closely monitor their financials.
Patient revenues for the upcoming fiscal year are forecasted at $179 million. Specifically, the hospital projects about $43.6 million from in-patient treatments, while out-patient services, including revenue from professional services like the Center for Breast Health and Imaging, OCH Medical Associates and OCH Urology Associates, provide almost $135.6 million, or the lion's share of hospital funds.
Other revenue streams, like employee pharmacy sales, employee and visitor meals, the OCH Wellness Center and an electronic health records incentive, add an additional $3.6 million to the books, increasing projected total gross operating revenues to about $182.7 million.
Allowances and uncollectable accounts go on to slash the forecasted $179 million of in- and out-patient care by $116 million.
Contractual insurance adjustments and allowances take away the most from OCH's projected FY 2014-2015 revenue. Combined, adjustments for Medicare ($45.1 million), Medicaid ($21.6 million), Blue Cross Blue Shield of Mississippi ($18.7 million) and commercial insurances ($7.8 million) total $93 million in forecasted deductions. OCH also budgeted $880,227.15 for worker compensation, $13.4 million for other deductions and $8.7 million for uncollectable accounts in the upcoming fiscal year.
The hospital's total operating revenue for the fiscal year comes to $66.4 million after subtracting the deductions. Other non-operating funding streams -- investment income, contribution and transfers from the county -- are projected to push that figure to $68.15 million.
Salaries then take another significant chunk away from OCH's total potential revenue. Divided between nursing services, other professionals and services, the hospital expects to spend $32.25 million on employee pay. Other expenses push its total operating expenses to $65.45 million, while non-operating expenses are projected to increase that total by $2.01 million.
The hospital's ambulance service is expected to operate a loss, even with funding streams from the city, county and Mississippi State University, the hospital's budget projection shows. By law, the county must provide funding for the emergency service.
OCH projects $2.3 million from in- and out-patient services provided by the ambulance services, but deductions from revenue again slash the total, this time by almost $1.5 million. The $848,499.38 in projected revenue drops into the red once $1.3 million in forecasted expenses -- salaries, vehicle costs, maintenance, supplies, insurance and depreciation -- are accounted.
OCH will request almost $230,000 in additional funding from the county and a combined $70,000 from Starkville and MSU to offset the $411,687.75 net loss, but an additional $113,746.46 is needed to break even.
The hospital's ambulance service has operated at a net loss since FY 2012-2013, but its amount in the red has slowly risen. Documents obtained by The Dispatch show the ambulance service operated at a net loss of $686,054.08 in FY 2012-2013 and $467,323.56 in FY 2013-2014.
On Monday, Oktibbeha County Board of Supervisors President Orlando Trainer again called for a joint meeting between supervisors and hospital trustees. He said the county should approve an independent, third-party financial analysis of the hospital to determine its budgetary strengths and weaknesses so the county can better plot a course for health care services in the future.
Trainer made similar calls for such a meeting in April and last fall, but a date never materialized. A formal date was not set Monday.
An outside financial analysis of OCH is required by the state before the county can initiate a sale or lease of the facility.
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch
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