OCH budget projecting $1.5M operating income after adjustments

October 11, 2013 10:16:28 AM

Carl Smith - csmith@cdispatch.com

 

OCH Regional Medical Center's Fiscal Year 2013-2014 budget projects almost $1.5 million in operating income after administrators cut almost $2 million from expenses compared to the previous year. 

 

Hospital CEO Richard Hilton confirmed Wednesday a 5 percent pay cut will be implemented to employees who earn more than $8.50 an hour, while workers' 80-hour work weeks will be scaled back to 76 hours. The pay cut also applies to salaried workers. 

 

The scale backs were initiated to offset rising expenses and lower reimbursements for health care services. 

 

On Wednesday, Hilton said the hospital's moves are reflective of what all hospitals are going through with the changing state of the healthcare industry. 

 

"We're accurately trying to project what our revenues are going to be," he said. "We really positioned ourselves to look critically at expenses and trim those down as a budgetary goal, but we fell short. We said our choices that were left were layoffs or to have reductions. We chose reductions." 

 

OCH's FY 2013-2014 budget shows a 5.82 percent decrease -- $34.27 million to $32.28 million --in employee salaries compared to what was budgeted for the prior fiscal year, a move which puts that expense stream closer in line with FY 2011-2012's budgeted $32.82 million. In terms of actual expenditures, salaries cost OCH $33.36 million in FY 2012-2013 and $31.2 million in FY 2011-2012. 

 

Employee benefits are expected to rise 6.75 percent this fiscal year, while total budgeted expenses -- wages, benefits, supplies, professional fees, purchased services, depreciation, rentals, utilities and other direct costs -- are down 2.12 percent compared to the previous fiscal year. Between FY 2011-2012 and FY 2012-2013, total expenses were expected to rise 5.57 percent but actually increased almost 9 percent. 

 

Because of belt-tightening measures, OCH is now budgeted for a $1.52 million operating income line item for FY 2013-2014. In FY 2012-2013, administrators planned to receive $2.91 million on the same stream but actually experienced an $886,748 loss. 

 

Inpatient revenues continue sliding to outpatient, Hilton said, which affects the amount of uncompensated care the hospital performs. Deductions from revenue, which factors in uncompensated care, decrease OCH's gross revenue by almost $112 million for the upcoming fiscal year. In comparison, FY 2011-2012's budget planned for $102 million in deductions and experienced $103 million. OCH receives about 33 cents to the dollar on uncompensated care, but that figure differs for its clinical applications. 

 

"We wound up at the end of nine months about $85,000 above the bottom line," Hilton said Thursday referring to the FY 2012-2013 loss. "I was telling Rotarians that if we were to close out last three months like the previous year, we'd be about $400,000 above with a good bottom line. We got slammed with the deductions going up on us. 

 

"When we did our budget last year, I did not foresee we'd have (higher deductions); I thought we'd have it this year," he added. "A lot of my peers are being hit with this right now. This is small compared to a lot of others. North Mississippi has been hit hard." 

 

While the hospital is tightening its financial belt, Hilton predicts services will continue to growth. Hilton said the hospital is projecting 100 more childbirths and a similar increase in surgeries.

Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch