News

Pardee board adopts $148 million budget

By Bill Moss, Published: September 6, 2012

Pardee Hospital's Board of Trustees adopted a $148 million budget last week that administrators and board members said would be challenging but makeable."This is an aggressive budget. We spent a lot of time talking to the finance committee about that," Chief Financial Officer Alan House told the Board of Trustees during its regular meeting on Aug. 29. "But we believe it's not just aggressive, it's achievable."
The budget crafting by the hospital board's finance committee and then the board itself consumed many hours. The Board of Trustees adopted the budget after a closed session of more than two hours.
For the year starting Oct. 1, tracking the federal budget schedule, the county-owned hospital's budget projects net operating revenue of $148.5 million — $11.6 million ahead of the 2011 performance and $7.2 million ahead of the projected net revenue for the current budget year, which ends Sept. 30. The net operating margin of 2.2 percent is far better than the net margin of .3 percent in fiscal year 2011 and the projected net of .4 percent this year.
Salary increases effective next April and averaging 2½ percent will be based on an incentive plan tied to operating and quality measures.
The hospital pegs its goal for higher income on a large increase in clinic visits (11 percent) and almost doubling pain management cases, from 2,386 this year to 4,558 in fiscal year 2013.
Patient admissions, patient days in the hospital, deliveries, endoscopy cases and outpatient surgeries were all projected to be flat for 2013 while ER visits, in-patient surgeries, MRI scans and CT scans were projected to rise slightly.
The budget for the new year came as the hospital reported a poor July financially, falling short in most revenue-producing areas. Down to budget were in-patient days, by 13 percent; patient admissions, by 3 percent; operative suite cases, by. 66 percent; inpatient surgeries, by 6.45 percent; outpatient surgeries, by 2.4 percent; urgent care visits, by 7.6 percent; and average length of stay, 3.7 days to 3.9 days. Only ER visits (up 2.8 percent) and physician practice visits (up 1.45 percent) came in ahead of the budget.
House, the CFO, also presented an analysis showing how Pardee in the 2012-13 would stack up in Moody's and S&P ratings of hospitals' financial strength.
Here are Pardee's numbers, followed by the recommended numbers of Moody's and S&P:
Operating income: 2.2 percent, 2.4 percent, 1.9 percent.
Net income: 3.3 percent, 4.7 percent, 3.4 percent.
Cash on hand: 148 days, 169, 183.
Cash to debt ratio: 4.7, 1.04, 1.24.
Average age of plant: 16 years, 11, 10.
In cash on hand, "We continue to do very well for a hospital our size," House said. "It's good for a hospital our size but it's running a little behind what Moody's and S&P want to see."
In cash-to-debt ratio, "We're the poster child for low debt among hospitals and companies for that matter," he said.
Board chairman Bill Moyer said while the budget may be difficult to achieve, the hospital has to drive revenue. For every dollar of cost, it adds $2 in revenue.
"It's a very challenging budget the administration has put forth," Moyer said. "We have seen declining volumes in many areas. It's extremely important we stop that and grow as a business."