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Hospital posts more debt, sets tax rate
by Ruth Campbell
Midland Reporter-Telegram
By Ruth Campbell
Staff Writer
Although the hospital has lost more than $11 million in 2008, Midland Memorial Board of Directors approved a lower tax rate at their Wednesday meeting.
The panel adopted a $12.022 cents per $100 valuation rate for fiscal year 2009, a 15 percent reduction from the current rate of $14.225 cents per $100 valuation. Allowing for increased property values, the rate leaves the effective tax rate unchanged, with an estimated total tax increase of $262,378 based on the addition of new properties to the tax rolls.
The effective rate, set by the Midland County Appraisal District, allows government entities to raise the same amount of tax revenue as the year before. Deadline for setting it is Sept. 30, according to the Midland Central Appraisal District.
Year to date, the hospital has lost $11.7 million. According to backup material from the board meeting, the hospital has been successful in "reigning in potential new bad debt through upfront collections," but existing bad debt, increases in charity care and contractual discounts" have led to more financial loss.
"The board made a statement last month that they are not willing to increase taxes and they've stood by that, so we'll craft a budget around that line in the sand, if you will," hospital President and Chief Executive Officer Russell Meyers said. "We've talked about a budget that's essentially break-even for next year. "
Meyers said the reason the budget was not available Wednesday is the finance committee didn't think details on how the hospital would get to a break-even budget were clear enough.
"We're going to spend some more time talking about the budget, but the district has a timing issue with setting a tax rate so tax bills can go out. They also have a firm, philosophical commitment that they don't intend to raise taxes and they aren't going to waiver off that, so the budget will adjust accordingly," Meyers said.
Chief Financial Officer Larry Sanz said the estimated fiscal 2009 budget includes $195 million in expenditures, compared to $187 million last year. Meyers said he believes the needed budget can be achieved.
"It won't be without some significant change both in the revenue area, especially with improvements in managed care agreements, and in the expense section. We have to improve our employee benefits costs, reduce the costs for purchase services and a variety of other things, Meyers said.
"It won't be without some effort, but I do believe it's doable. The biggest working concern through all that is the improvement in our business office. We have to reduce bad debt. We have to do a better job of collecting what's owed us. We think we're on the path to doing that," he said.
Manager of Public and Media Relations Marcy Madrid said the hospital won't recover the $11 million loss. But Meyers said the facility will have to do that much better for 2009.
Asked about a hiring freeze, Meyers said he won't rule out any possibility.
"We don't have a hiring freeze in place now. We have tried to be very careful about analyzing every job that becomes vacant, determining if we need to fill it or not. We'll continue doing that, Meyers said.
"As long as we continue to use any amount of agency staff, or any amount of overtime, I would still rather hire a new employee and avoid the overtime. A hiring freeze doesn't make sense to me now, but we're going to have all options on the table as we go through our recovery process," he said.
In the six years he's been president and CEO of Midland Memorial, Meyers said the hospital has always struggled financially, although it did have a couple of good years.
"We're never going to be a high-profit facility," he said. "We're the safety net provider for Midland County. We care for everybody who can't go anywhere else. Being highly profitable is not our mission, but we need to be slightly profitable so we can renew ourselves."
In the last few years, the hospital has received several awards based on quality care.
"There is a school of thought that says quality pays for itself, but I'm not sure I believe it because the gains we've made in quality of care have come from devoting additional resources to make assuring we do the job right, he said.
"Those additional resources in our current environment haven't been paid for. We've put more people in place. We've put more resources in place to improve quality, but we haven't gotten any more money for doing that. It's the right thing to do. It's what we should be doing, but we've struggled some financially for adding those resources. We have to figure out how to balance that," Meyers said.
In other business, the board:
- Approved having Vice President of Support Services Cory Edmondson enter into negotioatins for construction and other contracts associated with the Jenny Welsh Women's Center at the former Allison Cancer Center building.
Texas Tech University Health Sciences Center purchased the building from the hospital in September 2007. The project consists of renovating the existing building and adding 6,442 square feet of new space. All project costs are to be borne by Texas Tech Health Sciences.
Staff Writer
Although the hospital has lost more than $11 million in 2008, Midland Memorial Board of Directors approved a lower tax rate at their Wednesday meeting.
The panel adopted a $12.022 cents per $100 valuation rate for fiscal year 2009, a 15 percent reduction from the current rate of $14.225 cents per $100 valuation. Allowing for increased property values, the rate leaves the effective tax rate unchanged, with an estimated total tax increase of $262,378 based on the addition of new properties to the tax rolls.
The effective rate, set by the Midland County Appraisal District, allows government entities to raise the same amount of tax revenue as the year before. Deadline for setting it is Sept. 30, according to the Midland Central Appraisal District.
Year to date, the hospital has lost $11.7 million. According to backup material from the board meeting, the hospital has been successful in "reigning in potential new bad debt through upfront collections," but existing bad debt, increases in charity care and contractual discounts" have led to more financial loss.
"The board made a statement last month that they are not willing to increase taxes and they've stood by that, so we'll craft a budget around that line in the sand, if you will," hospital President and Chief Executive Officer Russell Meyers said. "We've talked about a budget that's essentially break-even for next year. "
Meyers said the reason the budget was not available Wednesday is the finance committee didn't think details on how the hospital would get to a break-even budget were clear enough.
"We're going to spend some more time talking about the budget, but the district has a timing issue with setting a tax rate so tax bills can go out. They also have a firm, philosophical commitment that they don't intend to raise taxes and they aren't going to waiver off that, so the budget will adjust accordingly," Meyers said.
Chief Financial Officer Larry Sanz said the estimated fiscal 2009 budget includes $195 million in expenditures, compared to $187 million last year. Meyers said he believes the needed budget can be achieved.
"It won't be without some significant change both in the revenue area, especially with improvements in managed care agreements, and in the expense section. We have to improve our employee benefits costs, reduce the costs for purchase services and a variety of other things, Meyers said.
"It won't be without some effort, but I do believe it's doable. The biggest working concern through all that is the improvement in our business office. We have to reduce bad debt. We have to do a better job of collecting what's owed us. We think we're on the path to doing that," he said.
Manager of Public and Media Relations Marcy Madrid said the hospital won't recover the $11 million loss. But Meyers said the facility will have to do that much better for 2009.
Asked about a hiring freeze, Meyers said he won't rule out any possibility.
"We don't have a hiring freeze in place now. We have tried to be very careful about analyzing every job that becomes vacant, determining if we need to fill it or not. We'll continue doing that, Meyers said.
"As long as we continue to use any amount of agency staff, or any amount of overtime, I would still rather hire a new employee and avoid the overtime. A hiring freeze doesn't make sense to me now, but we're going to have all options on the table as we go through our recovery process," he said.
In the six years he's been president and CEO of Midland Memorial, Meyers said the hospital has always struggled financially, although it did have a couple of good years.
"We're never going to be a high-profit facility," he said. "We're the safety net provider for Midland County. We care for everybody who can't go anywhere else. Being highly profitable is not our mission, but we need to be slightly profitable so we can renew ourselves."
In the last few years, the hospital has received several awards based on quality care.
"There is a school of thought that says quality pays for itself, but I'm not sure I believe it because the gains we've made in quality of care have come from devoting additional resources to make assuring we do the job right, he said.
"Those additional resources in our current environment haven't been paid for. We've put more people in place. We've put more resources in place to improve quality, but we haven't gotten any more money for doing that. It's the right thing to do. It's what we should be doing, but we've struggled some financially for adding those resources. We have to figure out how to balance that," Meyers said.
In other business, the board:
- Approved having Vice President of Support Services Cory Edmondson enter into negotioatins for construction and other contracts associated with the Jenny Welsh Women's Center at the former Allison Cancer Center building.
Texas Tech University Health Sciences Center purchased the building from the hospital in September 2007. The project consists of renovating the existing building and adding 6,442 square feet of new space. All project costs are to be borne by Texas Tech Health Sciences.
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Kodachrome wrote on Aug 28, 2008 3:55 PM:
Maybe Ruth did not go to an accredited elementary school. But what should we expect from a Hearst paper? "