PORT ANGELES — Olympic Medical Center administrators will look for the elusive 3 percent operating margin over the next two weeks.
The 2009 draft budget they previewed to hospital district commissioners Wednesday pencils out to a 2.4 percent margin.
Operating margin is the “profit” that nonprofit organizations like OMC earn to fund capital facilities and to upgrade or replace equipment.
“We will continue to work to find that six-tenths of a percent,” said Julie Rukstad, OMC’s chief financial officer.
“We’re still looking for savings.”
Commissioners expect to adopt the budget in its final form at their Nov. 19 meeting.
Meanwhile, Rukstad said, the hospital projects a 1.6 percent increase in the number of inpatients it will serve next year and a 3 percent rise in outpatients.
Charges to rise 4 percent
Also driving the revenue side will be 4 percent rate increases for both inpatients and outpatients, although physician fees and clinic charges will remain at 2008 levels.
One of the biggest drags on making the 3 percent margin is an anticipated 12.5 percent increase in bad debts from about $4.4 million to nearly $5 million and a 7.6 percent hike in charity care, from roughly $2.5 million to almost $2.7 million.
According to Rukstad, requests for equipment, construction and upgrades were slashed by 52 percent, from roughly $16.5 million asked to just over $7.9 million funded.
Adding to expenses are a projected 3 percent increase in overall wages and a nearly 6 percent boost in the cost of supplies.
OMC is Clallam County’s largest employer, expecting to pay wages and benefits of more than $68.8 million.
Savings hard to come by
Spending reductions are becoming harder to find, Rukstad said, as illustrated by her exchange with hospital Commissioner Cindy Witham.
Witham questioned an apparent 34 percent hike in staff travel and education, only to be told that the increase actually were funds cut in 2008 and restored for 2009.
“It’s not really an increase,” Rukstad said.
“We found savings in 2008, but they’re one-time savings.”
Hospital Administrator Eric Lewis said the funds included travel by home health staff and training that no longer can be postponed.
Despite the 2.4 operating margin, and the effort to push it to 3 percent, Commissioner Jim Leskinovitch said a healthy hospital should achieve a margin of from 3.5 percent to 5 percent.
“This hospital used to have much higher revenues 10 years ago,” he said.
“As a goal, 3 percent is like going onto the football field saying, ‘It’s OK to win by 1 point.'”
In other action at Wednesday’s meeting, commissioners learned that OMC’s hospital and satellite facilities will become a smoke-free campus on Nov. 20, the next Great American Smokeout.
Patients who smoke will be encouraged to quit, although doctors may include nicotine replacement patches, gum or lozenges in a patient’s orders.
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Reporter Jim Casey can be reached at 360-417-3538 or at jim.casey@ peninsuladailynews.com.
