In the face of uncertainty brought on by the COVID-19 pandemic, the Erlanger Health System trustees authorized the hospital's Fiscal Year 2021 budget Thursday.
Erlanger is planning to bring in about $1.1 billion in total operating revenue, with $13.3 million excess revenues over expenses from operations and a 1.2% operating margin. The budget includes a pension contribution of $11.5 million paid out over 12 months.
Erlanger is projecting a $5.2 million bottom line in next year's budget, which includes an increase in charge rates of up to 4.99%.
"The budget is based on the volumes, as best as we know," said Britt Tabor, Erlanger's chief financial officer.
Tabor said that so far, Erlanger's resumption of elective procedures and surgeries is going well. However, hospital officials will need to closely monitor trends, and the pandemic that could force them to make budget adjustments down the road.
For example, a dramatic surge in COVID-19 patients, which typically stay in the hospital longer and require more resources, would drive Erlanger's costs up.
Tabor said the most dramatic effect on the budget would occur if the surge caused elective surgeries and procedures to be halted again, which is what's currently happening in Texas.
"We're sort of still early in this reopening plan. We've seen good success, but if that falls off or softens in any way, it could be a fairly significant impact to the [patient] volume," Tabor said.
Other factors that could impact the budget are any changes to supplement payments from the government meant to offset costs, changes in staffing, supply chain challenges and public perception around seeking medical care.
"If the perception is, 'I don't want to go get that radiology test, I don't want to go get that [cardiac] procedure, etcetera, that could be a significant impact to us also," Tabor said.
Trustee Jim Coleman, chairman of the board's budget and finance committee, said that in the midst of all these uncertainties, Erlanger will continue to "wrestle" with an staggering amount of charity care.
Last fiscal year, Erlanger provided about $134 million worth of uncompensated medical care. This year, officials are expecting to provide about $150 million in uncompensated care, Tabor said.
The increase in uncompensated care is due in part to an increase in unemployment, resulting in people losing their health care coverage, Trustee Vicky Gregg said.
Next year's budget also dedicates $20 million in capital toward infrastructure replacement throughout the health system and $1 million for Erlanger's hospital in North Carolina.
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