Hospital directors OK rate increase
By Phyllis Moore
Published in News on September 14, 2006 1:58 PM
The hospital board has passed its new $176 million budget for the fiscal year starting Oct. 1, which includes funding for a new power plant, new hospital beds, upgraded medical equipment and salary increases and manages a projected increase in bad debts.
The budget, which represents a 7 percent rate increase, was approved by the Board of Directors at its Tuesday meeting. The increase is lower than last year's, which was 9 percent, said William Paugh, president and CEO of the hospital,
Paugh said the latest budget reflects the hospital's attempts to plan for the immediate as well as the distant future.
"As we go from one year to the next, we're trying to make sure that we're not just doing this one year at a time. We're really looking at how we can lay this thing out for the long haul so that we're able to maintain the level of experience and technology that folks in this community have come to enjoy over time," he said. "We're looking at what the community needs and how we can best provide it so that folks don't have to go elsewhere."
In addition to the normal capital needs, $2.5 million has been earmarked for new hospital beds, $1.3 million for IV pumps, $1 million for radiology and cardiology and $1.8 million for information technology, Paugh said. The hospital is also addressing capital expenses for infrastructure that hasn't received much attention in 35 years, he added.
A new energy plant is a top priority for handling existing and future power, heating and cooling needs for the main tower, west wing and the new southeast wing. The upgrade will be the basis for further improvements and expansion of hospital facilities, including the emergency and surgical departments, as well as behavioral health and imaging services.
"We're essentially out of capacity in our emergency department," Paugh said. "That's going to be one of the most expensive pieces we're going to have to look at, to right size that for the demand of emergency services."
Paugh said the ER will likely have to move to a different part of the hospital campus. Other areas, such as radiology, are also experiencing space issues, he said.
The hospital is borrowing $35 million to pay for the infrastructure upgrades, in the form of a bond.
"Providing quality healthcare programs and facilities are expensive no matter what city or state you are in, but Wayne Memorial Hospital is still very competitive," he said.
The hospital's rates have remained in the lowest quartile compared with other eastern North Carolina hospitals. In 2005, the average charge per discharge, taking into account the complexity of the treatment provided, ranked 24 percent below the state average. Wayne Memorial ranked 45 out of the 51 hospitals in that region.
Fifty-one percent of the operating budget, or $89 million, is for the 1,400 employees' salaries and benefits, Paugh said.
"We have been successful this year in terms of really putting together recruitment and retention packages that have allowed us to staff this place," he said. "We have worked hard to try to develop our own professional staff here ... and to figure out what it takes to keep folks here."
Ken Gerrard, board chairman, said the 7 percent increase was "a good working number for our board so that we could continue to invest in this campus."
Expenses for the coming year are forecasted to increase $11.1 million, or 7 percent. Of that amount, $5.5 million is directed related to salaries and benefits. Approximately $3 million is related to the increasing number of uncollected bills from patients who, to the hospital's knowledge, have the ability to pay or choose not to.
The total amount of uncollected bills for 2006 are estimated to be $17.3 million, with another $20.6 million budgeted for the next fiscal year.
In addition to uncollectable bills, the hospital has budgeted $8.4 million in bill reductions for patients who qualify for financial assistance.
"We owe it to the community to make sure that we pursue and collect those amounts that are collectable," Paugh said. "If we write something off, that doesn't mean the debt goes away. It's a fine balance, but we try to find it and allow for folks who can't pay their bill to get discounts and quality care. We feel we need to pursue that."
Overall, the hospital is in a fiscally sound position and the board of directors intends to keep it that way, said Dr. Joe McLamb, finance committee chairman.
"Having a good credit rating has allowed us to borrow such a large sum of money and we have to show our debtors that we are good stewards," he said. "We have to create and implement a budget that makes good sense and enables us to pay back this debt."
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