AC hospital to discuss plans to grow revenue

Ark City hospital officials will discuss 2011 budget shortfalls – and plans for growing revenue in the future – when the South Central Kansas Medical Center board of trustees meets later this week.

Hospital officials Monday acknowledged that revenues in certain areas were falling well below budgetary projections. For the first nine months of 2011, inpatient gross revenues were 13 percent less than for the same period last year, and 21 percent under budget, according to a written statement from the hospital.

So-called swing bed revenue – generated by beds used for longer term acute care – are ahead of last year by five percent, but below this year’s budgeted amount by 26 percent.

Outpatient revenues are 7 percent ahead of last year’s pace and 1 percent ahead of budgetary projections.

South Central Kansas Medical Center opened a new hospital, just off U.S. 77 Highway, this spring.

Hospital CEO Steve Perkins confirmed recent reports regarding changes to work schedules and efforts to reduce work time and personnel costs in a short-term effort to reduce operating expenditures.

Other actions taken include: requiring that expenditures for resources meet mission-essential criteria; a freeze on hiring any new positions; review of all positions that come open to look at alternatives to replacement; redesigned work flow and processes; examine all programs to determine if they remain viable; cut or delay purchases of capital items; aggressively review all inventory levels; request to open renegotiation of all agreements with suppliers/vendors; consider out-sourcing or in-sourcing programs; aggressively manage all expenses and utilization of resources.

While these changes and other long-term strategies are necessary, the primary remedy for future growth, officials said, is recruiting doctors. That can be a challenge in a rural market, they said.

Steps also have been taken for improvement of revenues and cash collections.

Across the entire organization systems have been reviewed and revised to enhance capture of charges and collection of revenues. New referral sources are being pursued. Accounts receivable is being tightly managed and all revenue processes are being examined.

“These steps and others are necessary as we continue to recruit physicians to increase revenues and expenses can come into balance,” Perkins said.

He noted that other hospitals and health care organizations in our region have been making reductions across the board for nearly two years and continue to do so.

Talk of financial problems at the new hospital have been mounting in recent weeks. In a recent phone conversation with NewsCow, Perkins said any budget struggles and actions taken to address them were not specific to the hospital in Ark City.

Hospitals nationwide are struggling, he said. Perkins wondered why the Ark City hospital was being singled out for scrutiny.

“If I thought there were a story here,” he said. “I’d discuss it with you.”

If he sounded defensive, Perkins said, it was because he was well aware that there are those who expect the new hospital to fail. Some, he said, would like to see it happen.

“We’re not failing,” he said.

The board of trustees is to meet Thursday and discussion will center around the 2012 budget.