Hospital budget swells, monitoring will guide adjustments

The Upper San Juan Health Service District Board of Directors met Tuesday night, with discussion and ultimate adoption of a 2009 Pagosa Mountain Hospital Budget dominating the agenda.

As with all local governmental entities and special districts, December means holidays … and completion of the ensuing year’s financial plan. Though the approved 2009 budget is the hospital’s second ever, it offers an enlightening and encouraging outlook.

Upon review of the hospital’s Statement of Revenues, Expenses and Changes in Net Assets, the most glaring variation from 2008 to 2009 is reflected in the net charges under “Operating Revenues.” According to the document prepared by hospital CEO Brad Cochennet and staff, the 2008 net charges will total $2,168,948 by year’s end, while those for 2009 will approximate $6,131,840.

Net charges are calculated, based on gross revenues collected from emergency room visits, inpatient and swing bed patient stays, lab, radiology, ambulance and surgical service charges, and pharmaceutical sales. Totals are converted to Critical Access Hospital reimbursement rates and Medicare revenue percentages, then adjusted for certain overhead, bad debt and error allowance.

Non-operating budget revenues include funds from specific ownership, general property taxes, investment income (if any), grants, donations and “other.” In 2009, they will amount to an estimated $1,510,000, while in 2008 — thanks in large part to $1.2 million in grants — they will equal approximately $2,640,743. Total 2009 revenues are expected to exceed $7.64 million, or roughly $2.83 million more than 2008.

Operating expenses will also rise in 2009, with the greatest increases expected in office costs and the purchase (or lease) of equipment and supplies. Next year’s total operating expenses should exceed $6.98 million, or $1.5 million more than those of 2008.

With 2009 non-operating expenses likely to match those of 2008, total 2009 hospital expenses should equal nearly $7.62 million, or $1.5 million more than those of 2008. Non-operating expenses typically include interest and amortization expenses.

In 2008, total hospital revenues fell short of total expenses by about $1.30 million. In 2009, however, revenues are expected to outpace expenses by approximately $24,072. If such is actually the case, the 2009 “Change in Net Assets,” will amount to a $1.33 million improvement over this year.

Nevertheless, during Tuesday’s budget discussion, Cochennet was quick to remind the district board that 2009 estimates are somewhat volatile and largely dependant on a wide range of social and economic realities. Even while 2008 statistics provide a basis for estimating 2009 figures, the year was full of surprises that no one could have foreseen.

For example, the 2008 budget foretold of many more inpatient stays than the hospital actually experienced. Meanwhile, the Emergency Room was far busier than originally forecast.

Therefore, Cochennet suggested constant monitoring of all hospital functions and procedures for the first several months of the new year, while making budget adjustments or amendments, as necessary.

He did openly express optimism toward the 2009 Pagosa Mountain Hospital outlook, and said he’d be thrilled if projections ultimately become reality.