The hospital will end the year with a strong balance sheet, and about 174 days of cash-on-hand. But net profit and patient volume remains low — affecting the system’s bottom line.
In its monthly update to the Colorado Springs City Council, CFO Mike Scialdone said patient admissions through Sept. 30 were down 6.8 percent from last year, but that net patient revenue was up 1.3 percent.
That’s due, in part, to the rise in emergency department visits at Memorial, which are typically more expensive. Out-patient visits are also up, 1.4 percent from last year. However, they didn’t increase as much as Memorial hoped.
“We thought we’d have more relationships with physicians, more partnerships to increase that,” Scialdone said. “We weren’t able to focus on that as much as we hoped.”
In part, Scialdone said it was due to uncertainty about the future of the municipal hospital. The city has sent out requests to state hospital systems to consider leasing Memorial.
But that’s where he was interrupted.
“I don’t want to hear that,” said Councilwoman Angela Dougan. “You’ve hammered that nail a thousand times and I don’t believe it. I want to know what you are doing to recruit new doctors, and I want to know why doctors are leaving.”
Larry McEvoy, Memorial’s CEO, finally answered the question: doctors and hospitals have different goals and the relationship has been adversarial in the past. With the looming federal overhaul, however, the two groups have to work together.
“Some of it is things we call ‘shin bumpers,’” he said. “Things like if the OR starts on time, if medicines are given on time. Things like setting up ways for them to sign patient charts. We haven’t always done a good job with those in the past — but we’re working on it now.”
And sometimes the conversations just don’t get started on the right foot, he said.
“Doctors want to know how we can make their day easier, for them, for the patients,” he said. “Hospitals aren’t necessarily looking at that. But we are now, and we’re starting that conversation.”
In the meantime, lower patient volumes and a volatile stock market mean that Memorial is now seeing negative income. Year to date income for the hospital system is down by about $18 million as of Sept. 30. Most of that comes from the loss in investments.
“But October was a better month,” Scialdone said. “We’ve made up about $13.5 million of that.”
And the negative numbers don’t mean Memorial’s balance sheet isn’t rock-solid, he said.
“We have 90 days of cash on hand, we’re able to meet our bond covenants,” he said. “We are in a strong position financially to end the year.”
Since the hospital won’t have a new owner next year — the current Memorial administration planned next year’s budget.
“It’s a very conservative budget,” he said. “And we pretty much kept things the same, not knowing what was going to happen.”
The Memorial team is one of five hospital systems competing to lease the assets from the city. The others are: HCA’s Health One in Denver, University of Colorado Hospital in Denver, Exempla’s Sisters of Charity in Denver and Centura Health in Denver.
The new budget has money for 70 new doctors and support staff — one of the ways Memorial is seeking to improve patient volume. Those doctors come from outside Colorado Springs, as well as practices that are already here, said McEvoy.
Aside from those new full-time employees, Memorial is projecting a 3.3 percent increase in operating margin, and a gross profit of $45.5 million. The projected profit for 2011 is $37.5 million.
Net patient revenue is expected to be around $622 million, an increase of 4.4 percent.
“We’ve budgeted that based on increasing outpatient numbers and ED visits,” Scialdone said. ‘But we’ve also planned a price increase.”
The increase isn’t across the board, and only addresses practice areas in which the hospital is lower or at the same price as its competitors.