The most recent interim financial statements for OCH Regional Medical Center from October 2016 to July 2017, that were presented to the OCH Board of Trustees on August 22 and recently requested by the Oktibbeha County Board of Supervisors, show a cumulative operational loss for the current 10 month period.
Although the hospital has experienced a gross patient revenue increase of $6.9 million (4.4%) from the prior FY 2016 period, deductions from revenue have increased by $9.1 million (8.7%). This increase in deductions has directly impacted OCHโs adjusted gross revenues, putting them at $57 million compared to the prior yearโs $59.3 million. Factors affecting increased deductions include significant third party payor reduction of covered services. These reduction in payments have contributed to an increase in this yearโs operating loss, as well as an increase in operating expenses of $2.3 million (3.8%). This results in a bottom line loss of $5.1 million. Of this bottom line loss, $4.4 million is for depreciation and amortization, which are non-cash expenses.
โThe decrease in bottom line is an experience that many other hospitals are seeing throughout the state,โ said OCH Administrator/CEO Richard Hilton. โHospitals are being impacted at different levels. Several hospital CEOs have shared their financial performance with me, and the same story of gross revenues and deductions from revenue increasing while insurance reimbursement is decreasing is always the common theme.โ
Insurance companies are shifting the financial burden to their policy holders and their dependents in the form of increased high deductibles of $5,000 to $7,500. These types of deductibles obviously often translate to increased bad debt and increase accounts receivable with longer payment terms.
โSome hospitals have already started to downsize their operations by eliminating non-profitable services, as well as reducing staffing positions as a way to reduce expenses immediately,โ said Hilton. โAs we finish out the last two months of this fiscal year, our staff will work together to look at ways to decrease cost. These actions will be discussed with the OCH Board of Trustees and the department directors of the hospital. When the bottom line is an issue at OCH, as it has been only a few times in our entire history, we work together to come up with the best solutionโone that has the least impact on our patients, employees and community.โ