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SMH facing $6 million in lost revenue

SHERIDAN — As fiscal year 2013 comes to a close and the budgeting process for 2014 enters final preparations, Sheridan Memorial Hospital board members discussed finances at length during their meeting Wednesday.

The hospital is facing nearly $6 million of lost revenue due to bad debt and charity care, Chief Financial Officer Ed Johlman said.
“That’s one thing to think about, just being a total in revenue, but the real kicker is that it translates to about $3.4 million in actual costs, in dollars that we paid out for drugs, supplies, staff time and other things to take care of those patients,” Johlman said. “It’s a real strain on us. That $3.4 million equates to about 8 percent of our total annual operating budget.”
Bad debt happens when patients who could pay a bill don’t pay. Costs for charity care arise when people can’t pay a bill. The hospital does everything it can to help those who can’t pay, and it does what is appropriate and ethical to collect payment from bad debt accounts, Johlman said.

Financial loss also occurs when caring for Medicare and Medicaid patients, Johlman said. The government pays approximately 60 percent of what it costs to care for a Medicare or Medicaid patient. Private insurance companies pay more, so the hospital collects more from them — which means higher premiums for patients with private insurance — to compensate for what is lost in Medicare, Medicaid, bad debt and charity care.

“The cost has to get covered somewhere, or we can’t keep the doors open,” Johlman said.
Johlman said overall revenues for the hospital are down about $3.3 million, which the hospital did not anticipate. That makes this year tough, he said, but staff are working on balancing those drops with expenses for next year as they prepare the upcoming budget for 2014.

CEO Mike McCafferty said the hospital is trying to get back to normal, even if it’s a new normal.

“At this point, zero would be a great normal,” McCafferty said.
Board member Gene Davis noted that the financial struggle is due in part to the large amount of growth the hospital experienced in the past two years with the opening of the Welch Cancer Center and the cardiac catheterization lab. The hospital also launched Cerner, a new computer program for patient records in 2012-2013.
Johlman did note that April was a busy month for the hospital and revenues were up.

In other business:
• The hospital board approved the purchase of a new PADnet Vascular System, which is used to monitor blood flow, for approximately $25,000. The old system broke down and parts are unavailable. Davis said it is a key piece of diagnostic equipment that is crucial for patient care.
• Chief Human Resource Officer Len Gross provided an update on the new urgent care department, which will operate within the Emergency Room to handle less severe cases such as broken bones. The urgent care department will have a separate entrance. Hours are proposed to be 10 a.m. to 8 p.m. Monday through Saturday, and it is expected to open Aug. 1. Costs for care will be similar to an office visit.

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