Olympic Medical Center rolls out proposed break-even budget

By Rob Ollikainen
Peninsula Daily News

PORT ANGELES — Olympic Medical Center has proposed a $139 million break-even budget for 2013 that includes $15 million in capital spending and $11 million in uncompensated care.

The seven hospital commissioners will consider approving the budget next week.

No public comment was offered in a budget hearing Wednesday night.

OMC has seen a 7 percent decrease in patient volumes this year while spending $9 million on electronic health records.

If the public hospital district is successful in its goal of achieving a “meaningful use” of electronic medical records by May, it will be eligible for more than $7 million in Medicare incentives over four years.

Commissioners on Wednesday approved a $10 million line of credit with KeyBank to pay for the Epic health records system and other capital projects.

The debt will be paid back over seven years at 1.63 percent interest.

Chief Financial Officer Julie Rukstad said the proposed budget assumes a 2 percent rise in inpatient volumes — the number of patients in hospital beds — fueled by double-digit spikes in magnetic resonance imaging, cardiac care and radiation oncology.

OMC is working with its affiliate, Swedish Medical Center of Seattle, to provide more health care services on the North Olympic Peninsula.

The projected rise in patient volumes factors into a budgeted $139.2 million in operating revenue for $70,052 in operating income.

“So that’s basically a break-even budget,” Rukstad said. “The bottom-line net revenue of $2 million includes meaningful-use dollars [from electronic health records].”

Epic records

Chief Executive Officer Eric Lewis said the implementation of Epic computerized records and associated software “will be our biggest goals in 2013.”

“That is a huge body of work that we must achieve,” Lewis said in a briefing on the hospital’s three-year strategic plan.

Staying with paper records and antiquated computer software would result in a 1 percent cut in Medicare reimbursement in 2015, followed by a 2 percent reduction in 2016 and a 3 percent loss in 2017.

Next year’s financial outlook includes $11.3 million in uncompensated care — $7.4 million in bad debt and $3.9 million in charity care — for a 14 percent rise from this year’s projections.

Clallam County has about 10,000 uninsured residents who can’t afford health care, Lewis has said.

Uncompensated care will account for 4.4 percent of gross revenue, Rukstad said.

The $15.5 million in capital spending includes $8.6 million for information systems, $3.3 million in medical equipment and $2.1 million for general construction.

Delay expansion

OMC will delay the $8.5 million expansion of its hospital emergency room for at least one more year.

To offset the demand, OMC recently opened a walk-in clinic in Sequim.

The 2013 budget proposal includes continued support for Volunteers in Medicine of the Olympics ($158,550) and the Dungeness Valley Health & Wellness Clinic ($129,150).

OMC provides free space to the free clinics.

“Free clinics do a great job for our community, and we’re going to continue to support them in our budget,” Lewis said.

The hospital district intends to take its authorized 1 percent increase from a $3.8 million annual property tax levy, which amounts to $37,697 in new revenue.

Commissioners will consider approving the budget and strategic plan at 6 p.m. Wednesday in Linkletter Hall in the lower conference area of the hospital, 939 E. Caroline St.

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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 5072, or at rollikainen@peninsuladailynews.com.

Last modified: November 08. 2012 5:58PM
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