Dramatic drops in patient visits, surgeries and revenue as a result of the COVID-19 pandemic created financial crises for hospitals across the nation, but Erlanger Health System in Chattanooga is one of the few fortunate ones expecting to head into the new fiscal year on July 1 on its most solid financial footing in recent years.
Like all hospitals in the United States, Erlanger received a sum of federal relief funds meant to offset the costs of the pandemic. However, an analysis of the public hospital’s financial records shows that a large part of the health system’s financial turnaround was due to expense management – including controlling labor costs, improved billing and fewer wasted supplies.
“The good news for Erlanger was way before COVID-19 was impactful for us, we had begun an initiative for expense reduction, and so that led us to be able to withstand a lot more of the turmoil, if you will, than many other organizations,” Lynn DeJaco, who became Erlanger’s interim chief financial officer in May 2021, said during a hospital board meeting Thursday evening. “This team truly adjusted the sails and allowed us to carry forward in 2021.”
The health system’s fiscal year 2022 budget, which was approved Thursday by Erlanger’s board of trustees, shows plans to bring in a net income of $20 million by growing revenue by 5.4% and admissions by 6.4% in the coming year.
It also allocates $37 million toward capital infrastructure improvements, purchasing new equipment and continuing to upgrade and enhance Erlanger’s information technology.