After job cuts, spending reductions in 2012, Elkhart General on stable footing
Posted: 05/15/2013 at 5:15 pm
By: Tim Vandenack
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Greg Losasso, president, Elkhart General Hospital
Dr. David VanRyn attends to administration business at a nurses station in the emergency room at Elkhart General Hospital. Dr. VanRyn has been been a physician for 31 years and has worked for Elkhart General for 28 years. ¬ (Truth Photo By Delayna Earley) ¬ ¬
The Elkhart General MRI control room is shown in this Tuesday April 16, 2013 photograph. ¬ (Truth Photo By J. Tyler Klassen) ¬ ¬ ¬
Elkhart General Hospital RN Allison Hartman works as part of a team to prepare a surgical suite for an operation Thursday, Feb. 14, 2013. The hospital has announced an expansion that would increase the number of operating rooms from eight to 10. (Truth Photo By Jennifer Shephard)
“We’re well-positioned,” he said Tuesday, May 14.
Thanks to the cuts, which prompted grumbling from some hospital workers, EGH finished 2012 with an operating margin of 6.5 percent, even better than expected. Through the first four months of 2013, it registered a 3 percent margin and Losasso anticipated a 3.5 percent margin, overall, for the year.
Still, not everything is rosy. In an interview with Jeff Costello, chief financial officer with EGH parent company Beacon Health System, Losasso said federal budget cuts brought on by sequestration will result in an unexpected $1.2 million dip in Medicare reimbursement revenue this year for EGH. Hospital morale, meanwhile, generates a “C” grade, average, in light of the change and shifting going on.
“There’s just a lot of change that’s going on,” Losasso said.
BEACON’S NET INCOME SPIKES
Official financial numbers for 2012 for EGH aren’t yet ready and probably won’t be compiled until November. However, Beacon Health System — the nonprofit parent company that controls EGH, Memorial Hospital of South Bend and other entities linked to the two hospitals — recently released its consolidated annual report for 2012.
According to the numbers:
• Beacon finished 2012 with $182.25 million in net income, a notable spike from $16.68 million in 2011. The biggest factor in that was an increase in patient revenue, factoring losses due to bad debt, to $845.79 million, up from $656.34 million in 2011.
• Patient days, a measure of those served, reached 140,256, up from 134,628.
• Admissions totaled 33,282, up from 32,232, and the average stay was 4.21 days, up from 4.18 days.
• Emergency department visits jumped to 119,514, up from 116,186, while surgeries fell to 18,577, from 19,572 in 2011.
The revenue jump of more than $165 million stems from three main factors, according to Losasso and Costello:
• An increase in patient load.
• The successful appeal by Memorial of a government decision that had denied it a special allotment for Medicaid patients. The reversal resulted in the influx of around $53 million in Medicaid reimbursement funds in 2012, attributable to 2010 and 2011 operations. That big inflow won’t occur again in 2013, so the net income figure for Beacon in 2013 will likely level off from $182.25 million for 2012, Losasso said.
• Legislative change related to Medicaid payments, which brought in another $52.9 million last year for the system.
Losasso also noted benefits and savings brought on by the decision in 2011 by EGH and Memorial leaders to unite under the Beacon banner. The affiliation has increased the hospitals’ buying power, enabling discounts on certain joint purchases, and allowed EGH, with guidance from Memorial, to take over handling of its information technology system instead of outsourcing the task.
$3.89 MILLION LOSS IN 2011
EGH finished 2011 with a loss of $3.89 million, according to the hospital’s Form 990 filed with the U.S. Internal Revenue Service. That led to the announcement in March 2012 that around 40 posts would be cut along with certain benefits and other cost-cutting measures would be implemented to put the hospital in the black.
The changes helped turn things around, and by year’s end in 2012, EGH was able to give employees a bonus, around $1,000 for a full-time worker.
“Most of those changes are still in effect and aren’t going to change,” Losasso said.
Indeed, more change is brewing. Seven licensed practical nurse posts will be phased out, yet more change, though the workers won’t necessarily be cut. Instead, EGH will replace them with registered nurses, who have more training, and some of the licensed practical nurses plan to return to school to attain RN status.
Neither Losasso nor Costello specified how the excess Beacon revenue from 2012 would be allocated. It’ll be reinvested back into the system, though, and Losasso noted the looming EGH construction project calling for construction of new surgical suites, which has a price tag of around $75 million.