Hospital district budget reflects continued growth
North Big Horn Hospital Chief Financial Officer Darcy Robertson gave an overview of the budget proposal for the upcoming fiscal year at a special preliminary budget meeting held on May 20 with the hospital’s board of trustees.
She noted that it is the first budget she’s built for the hospital district that included so much anticipated growth. The trustees will vote on the budget during their regularly scheduled June meeting.
Revenue
Starting with revenue, Robertson said the budget projects an 8.7 percent increase in anticipated revenue, noting that the largest area of anticipated revenue increase came from the clinic, in large part due to the addition of new providers and specialized services being offered. The total projected net revenue for the year is $31.7 million, an increase of $2.4 million.
Additional volumes across all services contributed to the overall increase in anticipated revenue. Robertson gave a breakdown of some areas of the preliminary budget with volume increases. Those areas included an additional 21 hospital admissions, seven additional swing bed admissions, an outpatient volume that included 45 additional MRI visits, 47 additional radiology visits and 72 sleep lab visits. The emergency room included an additional 73 visits. Long-term care at New Horizons Care Center anticipates an additional three residents for the entire year. The budget also includes 4,600 additional visits to the clinic in the coming fiscal year based, in part, on anticipated volumes for new providers and services.
The projected revenue also includes a half percent price increase for both inpatient and outpatient services. Robertson noted that care center and clinic services were not subject to the price increase. She said the purpose of the increase was to support a projected wage increase, adding that the price increase is significantly less than price increases seen in past four years that were in the 5 to 8 percent range.
Robertson noted that the budget anticipates contractual revenue (the net revenue generated from patient services after discounts and allowances with payers) to remain at around 40 percent. She said the budget also takes into account a decrease of about $161,000, based on the fact that the hospital is not expecting to receive any SLIB (State Loan and Investment Board) funding this year. However, it did include a $175,000 goal for other grant funding based on a new staff hire with extensive grant writing experience.
Expenses
The increased volume is accompanied by an increase in expenses. The budget projects a $730,000 increase in salaries for the fiscal year. Robertson said the increase reflects new staffing expenses. Benefits also increased for health insurance, dental and the like, not only for new staff but existing staff signing up for the programs. Robertson said professional fees (for services provided to the hospital) for things like strategic planning and the creation of a facility master plan are also included.
The budget also accounts for the need for contract labor to fill in during staffing shortages. General supplies increased, anticipating a 3 percent increase for the cost of food purchased by the dietary department. Minor equipment costs increased, as well. Robertson noted department requests are subject to review based on the budget. Medical equipment costs are also included.
A line item is also included anticipating the cost of tariffs on certain purchases like medical supplies, though the exact dollar amount of tariffs is difficult to predict. Robertson said the board will be notified if significant costs are associated with tariff related price increases. Costs of repairs for an aging facility are also built into the budget. The budget includes a decrease in advertising expenditures.
The budget also includes anticipated computer and software purchases and outside services, like a firm that helps the business office with insurance appeals, contracts and collections. A $77,000 service agreement for the hospital’s surgical robot is also included, to bring the cost up to a full year. Travel and education expenses are also accounted for in the budget, though staff are asked to secure grants whenever possible to help with these expenses.
Trustee Todd Simmons, a member of the board’s finance committee, said that there was “no shortage” of high-level capital item requests for the coming fiscal year. Around $1.3 million in capital equipment and $1.5 million in building upgrade capital project requests are included in the preliminary budget. He said there is still some “fine tuning” work to do to get that number down a bit before the trustees take a final vote to approve the budget in June.
Due to time limitations, Robertson was not able to go over every single line item with the trustees during the meeting, but she made herself available to answer questions afterward. The hospital district is a non-profit entity, and the board’s goal for the hospital is a “break-even” operating income. The proposed budget meets that goal.