A three-month delay in opening a new orthopedic surgery unit hurt Erlanger Health System's earnings for its third fiscal quarter, the hospital board of trustees' budget committee heard Monday evening.
The hospital reported a total net income for its third fiscal quarter of only $396,000, significantly below the budgeted revenue of $3.9 million for the quarter.
But the projected number anticipated significant income from the new surgery facility, which was supposed to open in January but instead did not start up until late March, Chief Financial Officer Britt Tabor told the board members.
Kevin SpiegelFor the year so far, however, the hospital has earned net revenues of $8,295,000, ahead of its budgeted target of $7,714,000, Tabor said.
Its net income before interest, taxes, depreciation and amortization was $36,265,000, below the budget of $38,132,000.
Admissions to the hospital were 1.3 percent less than budgeted for the January-March quarter. Tabor said admissions at all area hospitals were soft in March, although he did not give a reason for the decline.
One area for improvement is with overtime and fees for contractors and to call back staff members. Erlanger budgeted about $1 million, but spent about $5 million, according to Tabor's data.
The hospital official said bad debts and charity care constituted 7.25 percent of Erlanger's revenue, less than the 8.58 predicted in the budget.
The board members also heard warnings the hospital could face a challenging fiscal 2017, because of its own growth and uncertainty over state and federal policies, including who will be the winner of the next presidential election.
Besides expanding its facilities at Erlanger East, the health system is just beginning to install a new $100 million computer system that will affect all areas of the hospital, CEO Kevin Spiegel said. The software, known as EPIC, is used by major hospitals across the U.S., but some facilities have reported serious problems and cost overruns in getting it up and running.
Managing that growth is the challenge that keeps him up at night, Spiegel added.
"Getting to where we need to go is going to be very painful," he said.
But Tabor told the board members Erlanger is expanding its market share compared to its competitors. Without mentioning CHI Memorial by name, the Erlanger official said Erlanger Health System now has more than 35 percent of the market share in the Chattanooga metro area, compared to less than 30 percent for its closest competitor.
Spiegel also noted that if all of Erlanger's satellite facilities are included, its emergency rooms are the seventh busiest in the nation.
Contact staff writer Steve Johnson at sjohnson@timesfreepress.com, 423-757-6673, on Twitter @stevejohnsonTFP, and on Facebook, www.facebook.com/noogahealth.