OCH Regional Medical Center operated at a deficit of $3.2 million for Fiscal Year 2020, which ended Wednesday, according to budget documents presented at Tuesday’s special-call board of trustees meeting.
Some of the deficit came from the increase in tax deductions outpacing revenue growth by more than $2 million. However, some revenue losses came from public fear of catching COVID-19, Chief Financial Officer Susan Russell said.
“We’ve heard multiple department directors say that people are delaying care because of COVID,” she said.
Russell and OCH CEO Jim Jackson could not be reached for comment Wednesday when asked if they expect the hospital to make up that lost revenue during Fiscal Year 2021. The budget, which the trustees approved unanimously on Tuesday, projects a $709,000 operational surplus even as the COVID-19 pandemic continues.
The budget is based on projected numbers of procedures and patient days, which Russell acknowledged are difficult to predict due to the pandemic. Predicted increases in procedures, patient days and resulting revenue during FY 2021 include the divisions of respiratory therapy and labor and delivery. Meanwhile, fewer emergency room and physical therapy visits are expected, as the hospital has seen so far during the pandemic.
The $3.2 million operational deficit far exceeds the $260,000 shortfall the FY 2020 budget projected, according to the documents. About $900,000 in non-operational revenue brought the hospital’s net loss to $2.3 million, but Russell and Jackson did not respond to The Dispatch’s inquiries about how the hospital spends some of its non-operational revenue.
Revenue to support the projected $709,000 surplus for FY 2021 is expected to come from inpatient care and an expected increase in visits to OCH’s several clinics in FY 2021. The new budget also cuts expenses, the most significant being a decrease in employee benefits. The FY 2021 budget projects almost $1 million less than the FY 2020 budget, although the expected actual total for FY 2020 is only $228,000 more than the FY 2021 projection.
Russell and Jackson did not say which benefits are being cut or how this will affect hospital employees.
The budget also allows for $38 million in salaries and wages, while the FY 2020 budget allowed for $36.5 million, and the year’s projected final total was $35.8 million. Jackson said in July that hospital employees had been hoping for raises in light of their work during the pandemic.
The FY 2021 budget does not include the $13 million the hospital received from the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Russell said. The hospital has spent more than $5.1 million of the CARES funds so far.
Jackson said in July that much of the CARES money is in an escrow account, meaning it can’t be applied to the hospital’s income statements until the hospital can prove “valid COVID expenses,” since the purpose of the money is to “offset the incremental cost of treating COVID patients” and the hospital has to justify all of its CARES spending.
He said Tuesday that hospital administrators are trying to determine if they can use some of the CARES money for some of the expenses on the $11.2 million capital equipment budget, which the board also approved unanimously.
“If we see that we’re nearing the deadline (next year) of retaining that money and we feel confident from our consultant that that’s a proper use of the money, we’ll go ahead and purchase (some equipment),” Jackson said.
The capital equipment budget includes $4 million for electronic medical records software “for planning purposes,” Russell said.
The hospital also projects an expense of $1.75 million in debt service for FY 2021, a decrease from roughly $2 million in FY 2020 after paying off several debts for technology and equipment.
Additionally, Medicaid patients have had their COVID-related hospital bills covered by the insurance program, Russell said, and the CARES Act implemented a 2-percent increase in Medicare payments to physicians.