“We’re making improvements, but March will be a tough month” said Britt Tabor, Erlanger chief financial officer, at the March Budget and Finance Committee meeting of the Erlanger Board of Trustees on Monday afternoon.
Severance payments continue to be an issue in March, but Erlanger Health System has projected that it will break even in April, May and June. With losses expected this month of $638,000, and a year-to-date loss of $13 million, it is predicted that the fiscal year will end in pretty good shape.due to the restructuring that has been ongoing since December 2011.
For the year, out-patient services showed an improvement, and admissions exceeded those of the prior year, with good increases at Children’s Hospital helping to draw those numbers up. However, in-patient surgery was lower than expected. An attempt is being made to staff the hospital with 85 percent of the employees at regular hours, and utilizing only 15 percent relief staff.
Supplies and drugs came in at five percent under budget partially due to standardizing and limiting of vendors. Accounts receivable is trying to collect $8 million between now and June, and there is an increase in Medicare this year, projected to be above $90 million. Life Force helicopters have seen some competition with those from Vanderbilt Hospital in Nashville. Also, motor accidents which generate business for medical helicopters, are down. Both things have had a direct impact on profitability, but Life Force is expected to be even to last year.
Mr. Tabor reported that admissions were over budget by 2.1 percent last month and over the previous year by more than seven percent.
Among the positive notes for February: Children’s Hospital admissions were over budget by 18 percent and 20 percent higher than last year; total surgical outpatients were 3.2 percent over budget and 8.8 percent greater than last year; physician practice outpatient visits were four percent over budget and 9.3 percent higher than last year; paid FTE’s per adjusted occupied bed was 5.34 compared to a budgeted 5.40; bad debt and charity care as a percentage of gross patient revenue was 8.66 percent compared to a budgeted 10.11 percent and a total of 13 divert hours in February compared to 121 last year.
Areas still targeted for improvement include surgical inpatient volume, which was 11 percent under budget; outpatient revenue, under budget by $1.2 million; NICU days, under budget by 22 percent; Baroness Hospital births, 13 percent under budget and cath lab procedures, 35 percent under budget in February.
With four months left in its fiscal year, Erlanger has already incurred year-to-date uncompensated care costs of $59.5 million. TennCare and charity losses at Erlanger last month totaled $5.9 million. Last fiscal year, Erlanger had more than $82 million in uncompensated care costs and according to Mr. Tabor, “we are on track to do $90 million in uncompensated care (annualized) this fiscal year.”
In new business, Dr. Cy Huffman explained a new resolution affirming the execution of a professional Services agreement with the University Of Tennessee College Of Medicine. The purpose of this will be to provide obstetrical call coverage services for Erlanger’s labor and delivery.
Several “core faculty” have departed from Erlanger Health System and it is required that these positions be replaced. To date, there has been one commitment for a core faculty position, and five contracts have been offered, which leaves one remaining open. The new contracts specify more on-call time than those currently under contract and are estimated to total $950,000. This should save money because the additional time would be in their core responsibility. It is expected that all core faculty positions will be filled in two years, maybe sooner.
Dr. Huffman told trustees that this agreement would enable Erlanger to provide ongoing coverage of in-house OB/GYN physicians. This service, which provides physician availability for obstetrical triage and emergent care coverage, will both meet and exceed the community standard in terms of clinical quality and patient outcomes, it was stated.
Annual cost for UTCOMC to provide 24/7/365 physician call coverage is $550,000. There is no current agreement in place with UTCOMC to provide this call coverage and the cost is not included in the 2011/2012 budget. Erlanger’s valuation consultant, Integrated Healthcare Strategies, confirmed that the financial arrangement with UTCOMC was consistent with fair market value.
Erlanger will benefit from this coverage agreement in a number of ways, including the ability to continue to assist in the training and supervision of those in the OB/GYN residency program; ability to attract admissions throughout the four-state region, as well as enhancing Erlanger’s status as a comprehensive regional perinatal facility, it was stated.
This resolution was approved by the committee and sent to the consent calendar.