IRON MOUNTAIN - After several months of planning and calculations, a 2014 budget was approved Thursday by the Dickinson County Healthcare System Board of Trustees.
The operating budget projects a loss for 2014, but it is a much smaller shortfall than had been experienced in 2013. While 2013 has not been finalized, its bottom line deficit could be as much as $2.2 million. The projected shortfall for 2014 is $524,485.
"While we are currently budgeting a deficit for 2014, there are ongoing initiatives - some planned for in the budget and some awaiting approval - that could have a significant positive impact on this year," said John Schon, DCHS administrator-chief executive. "Once these initiatives are implemented and have had time to come to fruition, they could have a significant impact to further improve our current projected bottom line for 2014."
Projections included in the 2014 budget are:
- Inpatient and outpatient volume estimates.
- A 5.7 percent price increase, which is anticipated to only result in approximately 6.6 cents of net revenue for every $1 of gross revenue generated by the price increase. This is due to the impact of contractual arrangements/predetermined discounts with Medicare, Medicaid, Blue Cross, and other insurance plans, uncollectible patient accounts/bad debts, charity care and other free care adjustments, which substantially reduce the amounts all hospitals actually receive for the patient care they provide.
- The positive impact of new and enhanced services.
- A 3 percent staffing decrease due mainly to retirements.
- Estimation of severity of inpatient case based on historical trends (case mix index).
- Calculation of reimbursement from major payers (payer mix).
"While 2013 was an extremely challenging year for our health care system, we were able to finish the year with several consecutive months that showed positive bottom lines," said Schon. "This was due to the positive support shown by our community in response to our 'Stay Local' marketing."
The hospital's bottom line is the result of many factors that change from month to month, but in the end it is dependent upon patients making the active choice to stay local for their health care, Schon continued.
"We are very appreciative of the many choices people have made to use the physicians and health care services that exist right in their hometown community," he said. "I also want to express my deep gratitude to and appreciation for our staff who worked very hard every day to provide the high quality, locally accessible health care services in which we can all take pride. The level of dedication to their patients and to their profession has been both apparent and commendable through a very challenging year."
The budget is prepared in three parts: operating budget, cash flow budget, and three-year capital budget.
The capital budget plans for a total of $5.4 million in spending to occur in 2014.
Health information technology improvements and upgrades will use approximately $1.9 million with an additional $613,000 in required expenditures to meet the requirements of the federal government as they relate to electronic medical records. Departmental equipment replacements will use approximately $2.3 million.
Smaller construction and renovation within Dickinson Memorial Hospital will take place in several areas to improve the patient experience and include: private room renovation in the emergency department; inpatient room renovation/remodeling; Ambulatory Care Unit renovation; and a remodel of the obstetrics unit's triage/ waiting area . Necessary parking lot repairs are anticipated to cost $45,000 in the coming year.
The cash flow budget projects an increase of four days cash-on-hand.