Erlanger Health System's income continues to rise, though for the last quarter expenses climbed at even a higher rate.
Chief Financial Officer Britt Tabor reported that year-to-date net income from operations was $3.6 million, compared to a budgeted net income of $3.8 million. “Volume was a little soft, but we’re still right on target with our budget year-to-date.” he said.
Earnings for the second quarter were $1,041 million compared to a budgeted net income of $3,035 million.
Kevin Spiegel, president and CEO, said it is "unbelievable" that Erlanger is still making budget while paying off a $100 million computerized medical record system in three years.
He also said Erlanger's 33 percent share of self-paying customers is highly unusual for a public hospital. He said most public hospitals have a rate much lower.
Mr. Spiegel said that the investment at the Erlanger East campus is just now starting to pay off and will be reflected in upcoming financial reports.
He said that hospital on Gunbarrel Road is filling up "and I don't know where they are all coming from."
He noted that many are opting to get medical services at the East campus rather than coming downtown. He said East can take care of a wide range of medical needs.
Mr. Tabor cited three key reasons for lower than anticipated quarterly earnings, including supply management issues and higher than projected drug costs. “Supplies and drugs per adjusted admission were $1,933 compared to a budgeted $1,883,” he told trustees. However drug costs are expected to decrease as Erlanger starts buying discounted drugs this month and for the remainder of the fiscal year.
Mr. Tabor said, “The opening of our expanded Erlanger East Hospital in mid-December, coupled with capacity issues around the holidays, drove up premium salary costs by $1 million." He added that Erlanger also experienced higher than expected health claims expenses of $800,000 for the quarter. "We took a large hit on that during our second quarter.”
System wide, Erlanger’s admissions were .4 percent over budget and 6.1 percent higher than last year.
“The surgical percentage of admissions is really big for this hospital and very important,” Dr. Woody Kennedy told trustees. Although surgical inpatients were 5.5 percent under budget for the quarter, they were 16.5 percent greater than last year. Surgical outpatients were 7.5 percent under budget, but 5.4 percent greater than last year.
Mr. Tabor said, “We have made significant progress in building cardiac patient volumes during Erlanger’s second quarter,” while reporting that year-to-date Erlanger has performed 221 heart/thoracic surgeries and is on track to perform 600+ cases by years end. That is up from 200 a year.
Inpatient heart/thoracic surgeries with cabs/valves were 50.5 percent over budget and 20.8 percent greater than last year. “Cath lab procedures the last three months of 2016 were .8 percent over budget and 42.5% over budget at Erlanger East Hospital,” he said.
Helicopter patient transports were 4.3 percent over budget last quarter and 23.1 percent greater than last year, largely due to Erlanger’s strategic focus on regional outreach and business growth initiatives.
Bad debt and charity care as a percentage of gross patient revenue was 9.36 percentas compared to a budget of 8.69 percent. Indigent/self pay utilization was 22.4 percent over budget and 19.2 percent greater than last year.
Six months into its fiscal year Erlanger has provided $47.5 million in uncompensated care to the residents of this community, Mr. Tabor reported. “Annualized, this puts Erlanger on track to provide more than $95 million, and possibly $100 million, in free care to area residents this year,” he added.
Dr. Kennedy said early in his practice that a $5,000 deductible on a health insurance policy was very unusual. Now, he said, it's hard to get a $5,000 deductible. He said many are in the $12,000 range.
He said, "It's about like not having insurance."
As a result, he said, many wind up not paying Erlanger for their care.