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2/5/2019 10:36:00 AM
Nothing good to say about December 2018 financials for Vincennes hospital

Gayle R. Robbins, Vincennes Sun-Commercial Editor & Publisher

“And now we'll hear from Thom Cook with the financial reports,” said board president Jim Ziegler, referring to the last item on the afternoon's agenda.

But there followed only silence in Conference Room A on the fifth floor of the Health Pavilion at Good Samaritan Hospital, where the board of governors were meeting Monday.

Cook remained motionless — and silent — staring down at the documents on the table in front of him.

One Mississippi … 2 Mississippi … 3 Mississippi … 4 Mississippi.

“I was just trying to find something good to say about the month,” Cook finally said. “But there's just nothing good to say.”

The month in question was December of last year.

Cook said the month, if not profitable, was nonetheless “interesting.”

He told the board the hospital had been “very busy” with admissions the highest monthly total since May (though about the same as December 2016 and 2017).

Outpatient visits, however, were down — the fewest of any month during the whole year, not boding well of the report as a whole.

Expenses, Cook related, were a little above the monthly average, up, in part, because of the cost of two of the drugs required to treat a couple of the patients; those increased the Oncology Dept.'s expenses by upwards of $500,000.

Cook also pointed to an anomaly in the hospital's traditional December payor mix — the makeup of how patients are classified, their being listed as either having some form of commercial insurance coverage, being a Medicare or Medicaid recipient, or not having any insurance at all, what are referred to as “self-pay” although they are likely not able to pay at all.

Cook explained that typically, as the year ended, the percentage of insured patients increases, meaning the hospital's reimbursement for services improves and there's an “end-of-the-year pop” in overall revenue.

That didn't happen in December, Cook said; neither had it happened in November.

“We're not sure why, but we just didn't see that percentage go up to 26 or 27 percent as it typically has,” he said. “It remained at 24.8, so that impacted our reimbursements.”

And, in something of a blow upon a bruise, Cook said the stock market “tanked” during the month, leaving the hospital with a $1 million loss on its investments.

So December added more than $1.5 million to the loss column, leaving the hospital with an almost $2.5 million net operating loss for 2018, although that figure should come with an asterisk beside it.

THE YIN AND YANG OF 2018

It was a year of opposites.

During the first six months of the year the hospital reported a $2.6 million profit, only to see a complete turnaround during the last six months, when the hospital had a $5 million loss.

Expenses during both periods were about the same (though slightly higher in the second half), while revenue fell from $121,720,000 during the first half to $114,696,000 the last six months.

Average monthly admissions fell from 616 for January-June to 546.5 for July-December; patient days dropped from an average of 2,983 per month the first half of the year to 2,486.5 during the second half.

Average monthly outpatient visits actually increased slightly during the second half of the year, going from 44,871 for January-June up to 44,952 for July-December. The two biggest months for outpatient visits were August (49,388) and October (50,017).

A shift in payor mix (fewer insured patients, more Medicare/Medicaid and self-pay) also looks to have significantly affected hospital revenues during the second half of the year.

From January through June, Good Samaritan received just over 33 cents on the dollar for the care it provided; from July through December, that dropped to less than 32 cents on the dollar.

That disparity of 1.5 cents, over the last six months of the year, meant a difference of more than $5 million in revenue for the hospital — enough to turn a $2.5 million loss into a $2.5 million profit.

The last four years have seen the hospital's reimbursement rate drop, down to 32.5 cents in 2018 from 32.8 cents for the previous year. In 2016 the overall rate had been 35.2 cents on the dollar, and in 2015 the rate had been 38.4 cents.

Operating revenue in 2015 was $240 million based on gross patient revenues of $579 million; 2018 revenue of $236 million (about what it's been each of the last three years) was based on gross patient revenue of $680 million.

A lower reimbursement rate in 2018 resulted in less operating revenue despite an increase of $100 million in gross patient revenue.

Such is how healthcare financing works these days.

As for that asterisk, Cook pointed out that rather than folding some $17 million in depreciation savings back into the 2018 balance sheet, the money instead was set aside to pay for future capital improvements.

Plus, money the hospital is collecting from bad debts is not being added to operating revenue but put in the bank, improving Good Samaritan's cash position.

“So when you look at that loss, keep in mind there's all that other money we're basically holding back,” he said. “So it looks a whole lot worse than it is.”

Copyright 2019 Vincennes Sun Commercial






Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR


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