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Chattanooga: As losses mount, Erlanger looks to new fiscal year

By: Emily Bregel
(Contact)

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Frank Adkins
Britt Tabor

After a rough month in May and a financially draining fiscal year, Erlanger hospital officials are looking ahead to a new fiscal year with anticipation that state and federal dollars will help ease those losses.

An increase in the sales tax to support state trauma centers could yield $1 million for Erlanger in the upcoming fiscal year, and hospital officials are also hoping for between $3 million and $4 million in federal and state funding for hospitals that disproportionately care for low-income people on TennCare, the state’s managed Medicaid program.

Jim Brexler, Erlanger Chief Executive Officer, reminded committee members that funding for trauma centers is new in Tennessee.

“The state of Tennessee did no funding to trauma centers at all until this past year,” Mr. Brexler said. “They are collecting taxes and there will be some distribution of funds in Tennessee to trauma centers. ... We anticipate that to occur shortly after July 1, in the first quarter” of fiscal year 2009.

On Monday night members of the hospital’s Budget and Finance Committee reviewed the proposed fiscal year 2009 budget and moved to put the budget up for further discussion at Thursday night’s full board of trustees meeting.

Erlanger’s proposed budget for fiscal year 2009, which begins July 1, calls for a profit of $11.5 million, a more conservative figure than last year’s budget, which projected a gain of about $18.5 million, said Chief Financial Officer Britt Tabor.

However, so far this fiscal year — from last July through May — the hospital has experienced a loss of $12.3 million.

Committee members asked no questions about the proposed budget at Monday’s meeting.

In May the hospital experienced a loss of $2.9 million after hospital admissions dropped off “dramatically,” Mr. Tabor said.

At 2,256 admitted patients for the month, May admissions were 7.8 percent less than the previous year, dipping to the lowest level in about 16 months, he said.

“May was a challenging month for us,” Mr. Tabor said to committee members at the meeting.

The lull could be due to a general economic squeeze in health care, with more patients opting to defer care whenever possible, hospital officials said.

Mr. Tabor pointed out that year-to-date financial figures do not include a gain from the sale of Life Force, the hospital’s air medical program, which will add a one-time gain of $8 million in June’s financial statements.

Also at the meeting, committee members gave preliminary approval to a resolution to replace all 42 of the anesthesia machines and one MRI anesthesia machine in the hospital’s surgery suite, at a cost of $2.2 million.

Nearly 20 years old, the suite’s equipment is out of date and after December will be unserviceable by the manufacturer, so the purchase is not optional, said Dr. Frank Adkins, chief of anesthesiology at Erlanger.

“They’re continuously breaking down,” he said. “We’ve been trying to get these (new) machines over the years, but we’ve waited and waited and waited, and that’s why we’ve had to replace all of them pretty much at the same time.”

A one-time replacement of all the machines is actually preferable to an incremental change, Dr. Adkins said, as the uniformity of the machines will make training anesthesiologists easier and decrease the likelihood of mistakes.

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