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SoVaNow.com / December 11, 2013
The article in The Mecklenburg Sun on Dec. 4, 2013 titled “Hospitals cope with revenue cuts in absence of Medicaid expansion” does a good job of explaining the projected loss of revenue that Community Memorial Healthcenter expects in 2014 from the DSH (Disproportionate Share Hospital) program for uncompensated care. However, the article does not reflect the complete financial picture for Community Memorial Healthcenter.
The article stated that, “For hospitals, like CMH that posted a surplus of nearly $8 million in FY 2012, the loss of $240,000 will have no immediate effect on their operations or services.”
This statement does not reflect the complete financial picture for Community Memorial Healthcenter (CMH) for fiscal year 2012 ending June 30, 2012. The final audited financial report for FY 2012 shows an operational loss of $283,745.
Consumers should be cautious when referring to public internet sites such as http://www.VHI.org, since many report only the acute care division of a hospital which is not a true reflection of its operations. CMH operates an acute care facility, nursing home facility, home health/hospice services and seven hospital owned physician practices. CMH’s financial reports combine the revenues and expenses from all its operations to determine its actual financial position.
The past few years have been most challenging for hospitals like CMH, especially in light of the local economy’s impact on hospital utilization and continued reductions in reimbursement from both Medicare and Medicaid. In addition, the declining economy and unemployment in the area have increased the number of uninsured and the amount of charity and uncompensated care. As a result, FY12 was the second time in the history of our hospital that operations ended with a loss.
Our Healthcenter has been working on refining our operations to be more cost effective an d undertook a major analysis last year which resulted in additional efficiencies. While Fiscal Year 13 (ending 6/30/13) was slightly better and ended in the black with a profit of $1.5 million, it too was financially challenging. The reported profit was made up from investment income, charitable contributions, not from Healthcenter operations.
CMH’s annual operating budget averages $87 million requiring us to meet monthly expenses in excess of $7 million. In addition, the cost to upgrade equipment and provide for other facility needs averages $ 2-2.5 million dollars each year. Industry standards for hospital operating margins average 3-5%. CMH has been averaging in the range of .03 to .05% in the years that we are fortunate to end in the black.
All hospitals must operate in the black to carry out their purpose over the long term. As a nonprofit hospital, CMH’s operating profit (if any) is reinvested back into the hospital’s programs and services, used to maintain state-of-the-art equipment and facilities and for building reserves for future needs and unexpected events.
CMH has provided health services to the community fornearly 60 years. Each year, operations become more and more challenging. The CMH Board of Directors and management remain committed to providing quality, cost effective healthcare for the citizens of our community.
W. Scott Burnette, CEO & President
Community Memorial Healthcenter