Hutcheson's financial headache lingers

Hutcheson's financial headache lingers

May 3rd, 2012 by Mike O'Neal in Catoosa

Erlanger at Hutcheson's gradual but steady financial recovery suffered a setback in March.

The Fort Oglethorpe-based hospital's finance committee reported losses of about $1.8 million for the month - $1.4 million more than budgeted.

"It was a very difficult month," Hutcheson Controller Denise Baker said last week during the hospital's board meeting.

Baker attributed the difference between budgeted and actual losses to uncompensated care provided to patients who were either uninsured or unable to pay for medical services. For Hutcheson, the percentage of uninsured patients was its highest since last May and its losses the greatest since last September.

But Baker said this spike in uncompensated care was not confined to Hutcheson. Hospitals nationwide are reporting a similar trend for March and no one seems able to offer a reason why, she said.

Erlanger itself reported losses - "the highest ever" - of about $4 million, primarily due to indigent care, during March, according to Hutcheson CEO Roger Forgey.

After having been plagued by mounting losses over the past several years, the hospital entered a management agreement with Erlanger Health System last May that included an infusion of a $20 million line of credit. Of that, about $9.9 million has been used.

Officials have consistently said a turnaround at Hutcheson will not occur overnight. Its decline occurred over a period of years and its recovery is expected to take many more months.

Losses for the first six months of this fiscal year that ended March 31 stand at about $7.1 million compared to losses of about $5.7 million for the same period last year.

The hospital's board has agreed that like any other business, the hospital must spend money to make money. Stemming losses requires investing in new equipment and recruiting physicians who will refer paying patients to the hospital.

The monthly financial report shows the daily average census was lower than budgeted and significantly lower than for the same month one year ago. Fewer births and surgeries were also reported than in the previous year and also trailed the budgeted figure.

The greater-than-expected amount of indigent care provided coupled with lower-than-expected admissions during March followed several months of reduced shortfalls in revenue and patients.

Forgey said the hospital's staff should be applauded for its efforts during this difficult transitional period.

"They are doing their job," he said. "They are operating at 106-percent efficiency. [March's losses] are a payer and volume issue."

When the board of directors approved the report presented Wednesday night, it was noted that the hospital is making progress in controlling expenses and had come in below budget for salaries and other expenses.

"We're not out of the woods yet," board chairman Corky Jewell said after the financial report was issued. "But we are at a point where we can see where the trees end."