|�Zero-growth� budget strategy employed at
Some jobs lost in restructuring
|Kerry Craig | News-Telegram Assistant Editor|
Sept. 22, 2005 -- Hopkins County Memorial Hospital will be implementing a tight budget for the fiscal year that begins Oct. 1, according to Chief Executive Officer Michael McAndrew.
With anticipated revenues for the next year totaling more than $64 million, expenses are expected leave a budget surplus of $129,000 by the end of the fiscal year.
The new budget calls for total patient revenue of $31,653,000 while expenses are budged at $31,524,000 for the operating gain of $129,000.
Thanks in part to the increase in property values in the county, the hospital district will continue to hold the current tax rate at $0.1637 per $100 of property value, as it has for the past three years.
The hospital is completing a year in which the budget called for expenses of $31,071,000 and revenues of $31,307,000, leaving an anticipated budget surplus of more than $235,000.
But as of now, McAndrew said, the hospital’s finances for the year are “pretty much at break even,” and the final outcome will depend on the month of September.
McAndrew said he was expecting at one point to have a budget deficit of more than $1 million, but the hospital has received some upper limit Medicare payments which helped ease pressure.
�We may come close to breaking even by the end of this [fiscal} year if September turns out to be OK,� McAndrew said.
Preparing the budget for the new year has been complicated by several doctors leaving the area and efforts to recruit other doctors to move here.
�Essentially, we are budgeting for no growth -- pretty much a zero operating margin,� McAndrew said. �It has been pretty hard to predict volumes for next year so we have said �Let�s assume flat.��
With the projected “no-growth budget” on the table, the hospital is making cuts on the operating side, including the restructuring of staff and schedules for the hospital-based ambulance service and realignment in other areas of the hospital.
The restructuring was done at the cost of eight jobs at the hospital. Of those eight, all but one was given the opportunity to work at some capacity in the hospital. Not all the jobs were at the same pay scale, and some chose to not continue with the hospital.
�One of the folks was a manager, and there was no other management position open,� McAndrew said. �I felt real bad about that. There is no doubt in my mind people might have second-guessed which decisions got made, but nevertheless, they did have to be made.�
Another cut involved the day shift in hospital security. Those employees were reassigned to other positions.
McAndrew said the hospital board felt security was a service the hospital could do without, and they would be able to save a little money in salary and benefits by making the move.
Restructuring is also planned for the hospital’s nursing service, but there will be no affect on patient care areas.
�These are changes that were going to be made irrespective of the budget process. We just felt they made sense from an administrative standpoint,� he explained. �The two people that were affected had the opportunity to move to other jobs within the organization.�
Some changes had already taken place in the housekeeping department of the hospital that resulted in a reduction in the number of employees and, at the same time, “resulted in having a cleaner hospital.”
�These other cuts, although they have been painful, we think they were the right thing to do,� he said. �The board understands [administration] is going to review the consequences of these cuts and, if there is something we do not think we can live with, we are going to go back and then figure out what Plan B is.�
While the hospital district is planning for a “zero-growth” budget for the coming year, the administrator defended the construction of a new three-story addition to the hospital campus, saying the initial impetus for the building was two-fold.
�One was to give a clinical area, outpatient physical medicine,� significantly more space, that more room will allow for growth in that area,� he said. �We think there will be, and of course, we are going to add a new service there, and that is going to be water therapy.�
Another significant factor in the district’s decision to construct the new building was the need for office space for doctors.
�No hospital can exist without physicians putting patients in it,� McAndrew said. �Physician office space is an investment in our future. If we don�t have that, if we don�t have new doctors coming to town, we don�t have growth, and we are dead.�
The hospital’s new budget becomes effective on Oct. 1.