By Mary Alice Murphy
On Friday, May 16, 2014, the Gila Regional Medical Center Board of Trustees met in special session to review the fiscal year 2014-2015 budget and approve a resolution to submit the budget, which showed good news for the hospital.
GRMC Chief Executive Officer Brian Cunningham said the members of the board's Finance Committee had extensive discussions on the proposed budget.
"We have gone from a $9 million deficit at the end of last fiscal year, to a projected $3.2 million in the red at the end of this fiscal year to a projected deficit at the end of fiscal year 2015 of $650,000," Cunningham said. "There are a couple of reasons for the numbers. We have put in a lot of efficiencies, we have more revenue and throughput in the emergency room, and we still have a lot more to do in all those areas."
"Will the swing come from increased visits?" Dr. Darrick Nelson, board vice chairman, asked.
"The ER, cardiology, pain management, the cancer center with the new linear accelerator and increased imaging will all help," Cunningham confirmed.
"Do you have metrics on the ER, if it's not doing as well as well as expected or better than expected?" Nelson asked.
"Each department does monthly reports," Cunningham said, "so yes, we have the metrics. We are in dialogue to get a third surgeon on board, which will also help."
Board member Jeremiah Garcia said he knows a matrix has been built for pain management. "When do we have return on the upfront costs?"
"We have hit a high in the ER," Dan Otero, chief operations officer, said. "We have projected a loss in pain management for the first year, but now we are anticipating a gain."
Nelson asked if there were any tools to use the budget as a working document.
Beth Allred, controller, said in a normal year, "we use the budget on a working basis, but last year's budget was so far out of whack, we didn't do a variance analysis this year."
Cunningham said the department directors do monthly reports and meet regularly. "They send the reports to the C-Team."
"Basically we're building a history basis," Garcia said.
Pam Archibald, Finance Committee chairwoman, said she believes the "unknowns are not as great as last year. That's a plus."
Board member Roberto Morales Sr. said; "Hopefully the new chief financial officer will bring her experience."
Board member Dr. Donald Stinar asked if the Intensive Care Unit makes money or loses money.
"I think it loses, because of financing," Cunningham said.
Stinar recommended the hospital work to bring the ICU up to first rate or work on the transfer system. "I think we need a stronger ICU, which includes labs. We can't wait three days for results. We must try not to transfer so many people, if we can deal with them here."
"We agree totally," Cunningham said. "We're working for efficiency."
Board Chairman Charles Kelly said the capital list had a little more than $3 million allocated, with two or three items taking most of it—the MediTech 6 implementation and the Phillips-Newton medical machine, which"we need to do. I guess all of the items need to be done."
Garcia said he was curious about the Information Technology Department and having doctors get training for electronic records, and whether the hospital would have to buy computers or tablets for the physicians.
"The physicians can use our desktop computers throughout the system," Otero said. "MediTech will go live in January 2016. It's a big project."
"Will there be additional costs for it in fiscal year 2016?" Garcia asked.
"The costs are included this year," Cunningham said. "IT is one of our tighter departments."
Archibald asked if the financial outlay would be up front.
"I believe it's phased," Otero said.
"If not for the MediTech 6, which we really need, capital outlays are usually about $3 million," Cunningham said.
"In other words, this budget has no frills," Kelly commented.
Nelson, in his self-professed medical informationalist hat, said the success of the MediTech order set would rely on the number of accesses for the physicians to put in orders. "We may need COWS, not the milk kind, but computers on wheels, which could be available near patient rooms."
"If we see a shortage of computers, we could switch resources, because we are already doing PC replacements," Otero said.
"Are you comfortable with salaries going up?" Garcia asked.
"We have allocated $700,000 for raises, which is 2 percent across the board for caregivers and to bring some departments up to standards," Cunningham said. "There is also some for charge nurses."
"Who is not included?" Nelson asked.
"The directors and above will not receive raises," Cunningham said.
"Will we see Medicaid and Medicare increased revenue?" Garcia asked.
"We did this budget based on annualized revenue through the end of March," Allred said, "with a 7.78 percent contractual adjustment. We took a very conservative approach to this budget. We have been promised by the Human Services Department that Medicaid will go up 75 percent, and commercial insurance about 3 percent. If the feds want to 'help us,' we may be in trouble, but I think we will do better than projected.
"Supplies costs are up," Garcia said.
"They went up in Pharmacy, the operation room and cancer treatment," Allred said. "Revenue should offset some of those costs. The directors did a great job this year. We are projecting changing equipment as part of construction of the linear acceleration, which we moved to capital improvement. That's why cash is projected to go down this year, but will go up in the new fiscal year."
"The fund balance shows a loss of $3.2 million at the end of this year," Garcia noted.
"The fund balance at the close of the year absorbs the loss from the prior year," Allred said. "We have to keep the Cancer Center and Emergency Medical Services with separate fund balances.
"I am comfortable with the cash in hand," she continued. "I was worried we might have to cash in CDs, but I don't think we will have to."
"I think we've been careful and are going in the right direction," Kelly said. "I'm comfortable with the budget."
"I am, too," Archibald said.
"What is the effect of ObamaCare?" Stinar asked. "I'm seeing people who have serious illness, who have come to me saying it's the first time they have had insurance. So there's some good coming out of it."
"Because Medicaid will be up 75 percent, I think the first year will help us," Cunningham said. "We still have questions about the exchanges."
"We will send the budget to the state as soon as you approve the Fiscal Year 2015 budget," Allred said.
"I compliment the team for being conservative," Garcia said.
"The department directors did a lot of the work and did a marvelous job," Allred said. "They had ownership of the numbers. In my opinion, the budget should not be driven by the leadership. We did go back to the departments if we had questions, but the numbers belong to the directors."
The resolution was approved and the board adjourned.
The next regular board of trustees meeting will be held May 30.