PORT ANGELES — A concerted effort to mesh staffing levels with patient volumes paid dividends for Olympic Medical Center in the third quarter of this year, Chief Financial Officer Julie Rukstad told the seven commissioners Wednesday night.
The public hospital district reduced its operating expenses by $2.6 million from a budgeted $35.5 million in the third quarter, helping OMC post its first positive quarterly margin in a year.
“Most of the decrease is coming from our wages and benefits,” Rukstad said.
Wages and benefits were down 7 percent for the quarter, at $20 million, accounting for 58.8 percent of $34 million in revenue.
“This is primarily due to the program that we started at the end of May,” Rukstad said. “This is a full quarter of our flex time, cancel time and having people take time off when our volumes are low, all across the board. Not just in patient care, but in all of our support departments.”
Pay period adjustment
Close to 200 non-patient-care employees were put on a once-per-pay-period furlough day beginning June 11, meaning they are working 72 hours every two weeks rather 80 hours.
Nurses and other health care workers already were adjusting their schedules to meet patient demand.
Volume, particularly inpatient volume, continues to lag at OMC and other hospitals throughout the region.
Adjusted patient days, the bottom-line indicator for volume, is 7 percent below last year’s census from Jan. 1 through Sept. 30. The average daily inpatient census at the hospital is 39.2 this year, compared with 45 last year.
“We deliberately, conscientiously looked to decrease our staffing costs with our volumes going down,” Rukstad said.
OMC posted a 4.1 percent margin in the third quarter, bringing the year-to-date margin out of the red to 0.8 percent in the black.
“The third quarter really helped the rest of the year, the year-to-date numbers,” Rukstad said.
Meanwhile, hospital officials are working on next year’s budget and how to pay for the $9 million implementation of Epic electronic health records.
“It will be very challenging to get to a budget that makes sense, and we are working as hard on it,” OMC Chief Executive Officer Eric Lewis said.
“The revenue is our biggest challenge. The [Medicare] sequestration is taking effect. That’s going to be roughly a $1.2 million cut unless Congress acts. We’re just going to assume in the budget they’re not going to act, that the 2 percent cut will go forward.”
“All of Medicare reimbursement goes down by 2 percent across the board,” Lewis added.
“That’s a big hit.”
Medicare accounts for 55.8 percent of OMC’s business. An additional 11.4 percent comes from Medicaid, and 8.8 percent comes from other government sources.
In addition to Epic, OMC next year plans to budget $3 million for needed medical equipment.
ER expansion
Staff will recommend another one- to two-year delay in the $8.5 million expansion of the emergency room at the Port Angeles hospital.
However, a $323,000 remodel will be proposed to add four patient rooms for the crowded ER.
To pay for the electronic health records and other capital projects, commissioners Nov. 7 will consider taking out a $10 million debt issuance from KeyBank.
The debt would be paid back over 7 years at a fixed 1.59 percent interest rate, which Lewis described as “very attractive.”
The new debt would keep OMC under the maximum 20 percent debt-to-equity ratio as outlined in the hospital’s strategic plan.
“The average hospital in the state is about 45 percent debt-to-equity,” Lewis said.
“And with the meaningful-use dollars [federal incentives for digital health records], we will apply that to this debt.”
A budget hearing will be held at the next commissioners’ meeting at 6 p.m. Nov. 7 in the lower conference area of the hospital at 939 E. Caroline St., Port Angeles.
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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 5072, or at rollikainen@peninsuladailynews.com.
