Both of the territory’s hospitals are continuing to hemorrhage money, their chief financial officers told the Territorial Hospital Board Friday, with the Schneider Regional Medical Center almost $10 million in the red for the first nine months of the 2013 fiscal year, and Juan F. Luis Hospital down $7. 3 million for the same period.
“JFL is at a critical point,” said Juan Luis chief financial officer Deepak Bansal told the Territorial Board Friday as the CFOs of both hospitals described their financial straits.
In JFL’s finance reports through June 30, JFL’s total cash revenues, including non-operating income and with debt relief, were down 45.7 percent, from 2012’s $105.8 million to at $57.4 million in 2013. Much of the decrease was reflected in the hospital’s non-operating revenue, which dropped from $54 million in 2012, to nothing in 2013.
Because of the drastic drop in revenues, JFL’s earnings before interest, depreciation, and amortization (EBIDA) dropped to negative levels in 2013 after a short period in which it was in positive numbers. Previously, JFL had a negative monthly EBIDA for more than two years.
“JFL must strive to bring back EBIDA into positive territory so that the problem is not worsening month to month,” said Bansal, adding that if the negative trend is not reversed on a daily basis, JFL ‘s ability to continue providing quality care will be compromised.
JFL’s loss of $7.6 million as of June 30, was down 116 percent from 2012’s positive EBIDA $45.43 million.
According to Bansal, the hospital must significantly reduce expenses and increase revenues, including government appropriations. He emphasized that JFL’s government appropriation – approximately $18 million – is overwhelmed by the roughly $32 million the hospital pays in uncompensated care expenses for residents who can’t afford treatment.
Bansal added that JFL is losing out on CMS reimbursements that are not up to current rates. CMS currently reimburses JFL for inpatient cases based on a 1996 cost report, which, although brought forward for inflation, is still disproportionate to the actual inpatient costs.
Juan Luis Hospital is scheduled next year to implement a system for setting up departmental budgets that will make department heads more accountable for their revenues and expenses, Bansal said. He added that JFL also should consider adopting a hospital-based physician model, with on-staff physicians. Studies show such a system improves quality of care, patient satisfaction and revenue generation.
At Schneider, interim CFO Eugene Welsh said the St. Thomas hospital is also losing money. Through August, Welsh reported that Schneider’s inpatient revenues – grossing $72.5 million – dropped by $2.3 million million from 2012.
Outpatient revenues decreased by $8.5 million, at $52.5 million in 2012 versus 2012’s $61 million. According to Welsh, there are less outpatient surgeries and less registration for outpatient services, as well as decreased orthopedic surgeries.
Welsh said that overall, as of Aug. 31 Schneider’s total patient revenue in 2013 totaled $125 million, compared to $131.7 million for the same period in the 2012 fiscal year. After deductions, patient revenues were $65.5 million in 2013, down from $68.5 million in 2012.
Schneider financial reports indicate that, as of June 30, Schneider total operating revenues stood at $55.8 million, with operating expenses at $81.7 million. The $26 million difference is offset by $16 million in non-operating income, finally resulting in a $9.8 million deficit.
Welsh said that Schneider has so far collected $50 million of the $55 million projected total reimbursements.
Board member Angel Dawson pointed out after some quick calculations that, although both hospitals seem to lose the same amount in operations, there is a gaping discrepancy in the revenue to loss ratios.
“JFL is losing money at a much greater pace than Schneider,” he said. “I think it’s really worth substantial discussion as to why there is a difference in performance on the operating level. Is there a deficiency that JFL is not achieving that Roy Schneider is achieving?”
Dr. Anthony Ricketts, a member of the territorial board and chairman of the Juan Luis board, said the devastation felt by the St. Croix economy after the Hovensa closure partly accounts for the rapid loss.
“Our third-party commercial insurance base has been completely decimated,” he said. “We have a lot more patients coming in for services who do not have a source of payment.”
Ricketts added that ensuring JFL’s compliance with CMS guidelines also hike up expenses.
“Just being under a systems improvement agreement has added another layer of cost to us,” he explained. “There are certain mandates that we need to fulfill that are essentially unfunded.”
Both CFO’s financial reports are currently unaudited. JFL’s audit has already begun, while Schneider’s audit is scheduled to commence in January 2014.