Rising expenses and declining revenues are squeezing Gov. Juan F. Luis Hospital like a financial vise, its accountants warned Friday.
Senior manager Tony Kruse and partner Durrel Kelly of Grant Thornton, a large, international CPA firm that audits the hospital’s books, reported to the hospital board of directors Friday as Luis puts together its budget for the upcoming fiscal year.
Overall, current liabilities have gone up more than $10 million since last year, rising from $55.5 million to $66 million, Kelly said. Meanwhile, the hospital’s total capital and cash assets declined from $65.4 million to $63 million. Net assets have declined from $10 million in the black to $3 million in the red.
The hospital is heavily subsidized by the territory’s taxpayers to help it meet its mandate to provide care regardless of ability to pay. Not counting V.I. Government support, the hospital’s annual operating loss increased from $35 million in 2008 to $44 million in 2009, Kelly said.
But the government subsidy declined $5.6 million from $32 million in 2008 to $26.4 million in 2009, adding to the hospital’s woes.
Not all the news is bad though. Revenue from patients and private insurance companies is up, as are collections from patients who are able to pay. But overall, the trend is in the wrong direction, he said.
“In a nutshell the financial condition of the hospital has deteriorated over the last several years, due in large part to a substantial increase in expenses that has not been matched by an equivalent increase in revenue," said Kelly.
Full-time equivalents; a measure of compensated work hours equivalent to one full-time employee, has increased from 500 to almost 650 since 2005, he said.
"We also have a 20 percent increase in what we are paying those employees over the same five years," he said. "And I can pretty much guarantee Medicare and the various counterparties paying have not increased their payments by 20 percent."
Fixing the trend will involve hard choices, he said. Carefully analyzing staffing and expenses may reveal some opportunities for saving though. While it may be very difficult to just layoff unionized doctors and nurses, there may be savings to be found in rearranging schedules.
"There might not be a single person you can eliminate, but you might be able to identify 10 hours here and 10 hours there and pretty soon you have one full-time equivalent," he said.
Cutting costs is important, but so is increasing revenue streams, said board member Carmelo Rivera.
"There are some streams we haven’t tapped," Rivera said. "We could be going after estates to collect for services rendered, like most districts do."
Kelly said that was a good idea.
"I think you are right on target," he said. "The nice guy doesn’t win. You have to go after every payment where the patient has the ability to pay."
Investing in staff and equipment to allow the hospital to perform more lucrative procedures has potential to increase revenues too. A good example of this is the hospital’s growing practice of heart surgery, said Dr. Robert Centeno, the hospital’s medical director.
The hospital has done five open heart surgeries since performing its first several months ago, he said. All of them have been successful. The most recent one was a valve replacement, he said.
"We also did our first emergency bypass which is a significant event because the patient was really too unstable to transport," he said. "He is still struggling but he is alive and that is something that would not have been possible a few months ago before this program was implemented."
In other business, the board approved a $60,000 contract with Sennon Village for computer services to help the hospital get a new payroll system up and running. The hospital is mandated by the V.I. Government to install a new computerized system that is compatible with the V.I. Government’s system. The system should save money in the long run by eliminating hours of labor spent manually entering information from the hospital’s system into the government’s system, said Juan Luis Chief Financial Officer Rosalie Javois.
