The Virginian-Pilot
©
CHESAPEAKE
The Chesapeake Hospital Authority has experienced an operating margin below 1 percent for two consecutive fiscal years.
An increase in the amount of uncompensated care at Chesapeake Regional Medical Center and a decline in surgeries and other procedures were offset by increased revenue from new physicians and income from The Outer Banks Hospital in the most recent year ended June 30.
"Given the challenges we had in 2011, to see our operating income go up by $377,000 made us happy," said Michael J. Corcoran, Chesapeake Regional's chief financial officer.
The hospital authority is a tax-exempt government organization that operates Chesapeake Regional Medical Center and other health care entities, including outpatient centers, an assisted-living center, aphysicians group and home and hospice care services. The authority also owns 40 percent of The Outer Banks Hospital and 50 percent of The Surgery Center of Chesapeake.
The authority and its subsidiaries employ about 2,300 people. Although its board is appointed by the Chesapeake City Council, the hospital authority is financially independent from the city.
It reported $2.4 million in operating income on operating revenues of $264.7 million for the 12 months ended June 30, according to audited financial statements released by Chesapeake Regional Medical Center.
The authority reported $301.7 million in net assets as of June 30, which was $19.6 million more than the prior year. Much of that increase came from $17.8 million in income from investments.
Some of the net asset increase came from operating income growth.
In 2011, income from The Outer Banks Hospital started to be reported as operating revenue because the facility paid off its loan from the authority. That added $1.5 million in revenue.
New physicians added $500,000 to the authority's operating revenue in 2011. Five physicians joined the Chesapeake Regional Medical Group in 2010 and 2011, bringing the total membership to 23.
Overall revenue from patient services remained nearly flat, increasing by 0.2 percent to $255.9 million, according to the statements. Patient service revenue at Chesapeake Regional decreased by 0.8 percent between its 2010 and 2011 fiscal years, mostly due to a 21 percent increase in uncompensated care, Corcoran said.
The authority estimated the cost of Chesapeake Regional's uncompensated care in 2011 was $76.4 million. That included charity care, the cost of patient care that is written off as bad debt and losses from Medicaid, which often pays rates below the cost of providing a service.
"That's really what drove it down," Corcoran said, "and that's just a reflection of what's going on in the economy."
Chesapeake Regional also saw a dip in inpatient and outpatient surgeries, due to the economy and the retirements of two orthopedic surgeons, Corcoran said. The cost of surgical supplies increased by 11.9 percent, driven by the growing use of implants and other expensive materials.
In 2011, the authority and its subsidiaries contributed $700,000 in support of community activities, Corcoran said. That included donations and in-kind services to the Chesapeake Care Free Clinic, as well as other health organizations and programs.
Corcoran said the hospital's operating margin of 1.9 percent is close to that reported by its peers. He pointed out that the authority's margin of 0.9 percent for 2011 was an improvement over the 0.8 percent margin in 2010.
However, he said, "We need to improve from that, and in the current year, we are, in fact, improving from that."
In 2012, the organization will continue its clinical software installation, place equipment in patient rooms for bedside charting and activate a medical device tracking system.
"The general reimbursement environment is such that we can't expect to get much help from the payors in terms of anybody giving us extra money," Corcoran said. "So, we are focused on developing programs for growth, for new services, and we're also focused on cost-control."
Amy Jeter, 757-446-2730, amy.jeter@pilotonline.com
Delicious
Digg
Reddit
Facebook
Twitter
Google
Yahoo
Unable to Sue This Complex
This hospital empire is protected from lawsuits as it is treated as a municipal and state entity as it is formed under a state charter.
Hospital empires
Does seem a shame that there is no recourse for those that might have a valid claim against a municipal entity, whether from a patient rarely seen by an overworked staff or former employees fired right before the holidays, never addressing outstanding issues, little things like life insurance claims never paid or health benefits cut off once a piece of paper is signed ending a loyal workers employment, not even receiving a X-Mas turkey, so many ways for employers to balance the books and end up in the black.
Maybe that's why they are in the black
...because someone can't walk into the Emergency Room with no insurance and the hospital is REQUIRED to see and treat them. Then this uninsured person that just received thousands in free care can turn around and SUE the hospital for millions with an attorney that also walks away with millions because they worked on contingency.
I wonder....
I wonder what the bottom line would look like if they had to operate a trauma center, or a cardiac surgery center or operate an air ambulance service.
You know all the things that the health care system they fought tooth and nail has to provide for the citizens of Chesapeake.
Cutting costs to show a profit
In desperate times, some businesses resort to more extreme ways to save a dollar and report a profit, sometimes at the expense of patient care and safety.One way to accomplish the goal of ending the fiscal year in the black is to fire your most experienced employees, which does away with those pesky benefit packages, pay extreme amounts of overtime wages to the remaining employees, which slightly increases the chance that the patients needs can not be met by employess working 80 plus hours a week. Hopefully this was not the case with Chesapeake General.