The Hopkins County Hospital District is looking at an operating budget of more than $60 million for the coming fiscal year, with a projected deficit of more than $2 million, according to Chief Executive Officer Michael McAndrew.
“It's not pretty. We're kind of in the same boat as most of the small, rural hospitals, not only in Texas but across the country,” McAndrew said. “We're struggling, more than half of the hospitals in the United States are actually losing money and, unfortunately, we're in that category, but we are hoping to turn that around this year.”
Total operating expenses for the hospital for the current year are just over $62 million and the budget for the new fiscal year is calling for operating expenses to surpass $63 million.
In total patient revenues, the hospital is anticipating more than $132 million, which will result in net patient revenue of $48.598 million.
The proposed budget is calling for operating costs of $63.238 million.
“I think the biggest problem we face is we have fixed reimbursement and rising costs,” McAndrew said. “We, in the past, have done cost analysis and really identified that we're a fairly efficient operation and in order to cut out significant costs, we must cut services. We've done that recently with hospice; we eliminated hospice because there was redundancy in the community. We are also having mandatory meetings right now with all of our employees to ask them to help us identify ways we can take out cost inefficiency in our system.
“We are also looking at the way we deliver care from a clinical standpoint with our chief medical officer to identify some waste and inefficiency there as well,” McAndrew continued. “The biggest cost of care is on the clinical side, obviously, and so the more efficiently we can deliver those services, the better off we will be.”
McAndrew also said the hospital has made significant cuts in capital spending and the district is only buying things now that are necessary to continue the district's mission.
The hospital executive, in addressing the costs of buying the physician's clinic group, said the consequences of not buying the clinic group were so severe that it did not come up for consideration.
“There was a group out of Tyler attempting to purchase the group,” he said. “Had they done so, they would have taken pretty much all the surgeries out of the hospital and fed it to the ambulatory surgery center which sits on our campus. That would have pretty much gutted one of the few profit-making centers that we have.”
The hospital district is not, however, going to change its tax rate of 21.73-cents per $100 property value. Overall property values in the county are up 2.9 percent from last year and that increase is anticipated to generate $3.925 million.
“The effective tax rate kicks things up a little bit because of the 2.9 percent increase in property values,” McAndrew explained. “I think it's going to mean a total of about $60,000 additional income to the hospital this year.”
The hospital's chief executive officer said the hospital's efforts to recruit more physicians as well as cost reduction efforts will be implemented in an effort to ease the budget deficit.
The new budget and tax rate will become effective on Oct. 1.
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