Hospital finances healthy in pandemic
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Warren General Hospital would have had an unusual year in 2020 even without a global pandemic.
"It certainly has been an exceptional year," CEO Rick Allen said during the hospital's board of directors annual meeting.
He thanked the community, employees, physicians, and staff for their efforts through a global pandemic that has, so far, had little health impact in the county.
The county has had 66 cases so far -- a rate of 167.1 cases per 100,000 people, the lowest in the state.
Of more than 2,000 COVID-19 tests administered at the hospital, only 15 have returned positive results.
"We have not had any positive inpatients," Allen said.
The pandemic did have impacts in the fiscal year that ended June 30.
"We've had a lot of focus on workplace safety through the COVID pandemic," Allen said. "PPE is a daily grind."
The hospital's inpatient and outpatient volumes were both down, though they had been on track to be comparable to recent years before COVID-19, Allen said.
"Absent this pandemic, our trend lines were doing quite well," Allen said.
Still, the hospital's bottom line was strong.
Allen said revenues exceeded expenses for the first time in fiscal year 2019. The hospital ended up in the black by about $50,000 on a $74 million budget. This year, the margin was much higher -- just over $5 million.
Between a 5% increase in operating revenue and a 1.2% decrease in operating expenses, the hospital's 6.4 percent operating margin for the year is well above the average hospital margin of 1.8 percent, he said.
"We're operating at an extraordinary level," Allen said.
That is good news, but Allen pointed out that the hospital has to make up for losses of $3 million to $7 million each year from 2014 through 2017.
Those shortfalls meant needed projects went unfinished.
"We have an old hospital," Allen said. "The infrastructure is old."
The average age of facilities at Warren General is 37.5 years. The national average for healthcare facilities is 11 years. The hospital is starting to get younger.
"For years, this organization suffered without having the means to keep up. We're getting there now."
He said the capital needs of the facility are "probably north of $20 million."
Improvements completed in 2020 include a 3D mammography suite, surgical suite air handlers, and nurse call systems in numerous departments, as well as some new tanks, exhaust, and grinder pumps.
On the schedule or already completed for 2021 are a new CT simulator, a new linear accelerator and vault, roofing repair and renovation, signage, resurfacing and repairs in the parking garage, cooling tower replacement, chilled water system upgrades, and improvements in the Emergency Care Center and Rehabworks.
Looking farther out, the hospital needs to replace its elevators and the maternity department needs to be renovated.
Maternity is not one of the departments responsible for putting the hospital into a positive financial position. "Most community hospitals have eliminated their maternity units," Allen said.
Chief Nursing Officer Joe Akif said there are usually about 300 births each year at the hospital.
Allen said research shows hospitals tend to break even at about 1,000 births. "At 300, we don't," he said. "It's something we have to do and we should do."
Board President Thad Turner said the board made decisions about partnerships with that department in mind. "Maternity and behavioral health were the two most important factors in the partners that we picked."
Allen said the hospital continues to work toward its vision of "an independent, community-focused hospital delivering 'world class' medical care and service through the collaborative efforts of physicians, staff, and volunteers."