In an otherwise gloomy budget year for the City of Sitka, the community hospital is holding its own.
Hospital chief financial officer Lee Bennett had some of the happier news of the budget season. He shared it with the assembly during its third-and-final budget work session last night (5-10-12).
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The hospital is not getting rich, by any means, but its cash flow management has improved dramatically. Bennett said it was typical in the not-too-distant past for there to be a time-lag of over four months between when a patient received services, and when the hospital was paid.
Things have changed.
“Our last month, we were down to 48 days. That helps the cash flow. So we don’t have money sitting out here in accounts receivable doing nothing for us. We’ve been able to collect that, pay our bills. Our accounts payable runs probably lower than it’s ever run. We do not have vendors calling us up saying, When are we going to get paid? We don’t get vendors calling us up saying, We won’t ship until we get a payment. And that’s happened to us.”
Bennett’s budget shows a potential net income of nearly $800,000 for the hospital. The figure includes $155,000 in capital support from the city for equipment purchases, and $450,000 in tobacco tax receipts.
The tobacco tax has been a boon to the hospital, but Bennett said receipts would likely go down, with fewer cruise ship calls, and fewer people smoking.
He light-heartedly suggested that the Blue Lake Hydro project might bring a few more smokers to town.
Other factors improving the hospital’s bottom line are the resumption of obstetrical services this year, and a change in SEARHC’s insurance benefits that allows employees to seek medical care across the bridge.
On a more serious note, Bennett said one of the hospital’s expenses was climbing – the amount of free services. Under law, the hospital can turn no one away, regardless of their ability to pay. Bennett expects it to add up to $900,000 next year.
“Medicaid has a very narrow scope at this time. You have to be under 18. Pregnant women fall under it. Males between the ages of 19 and 64 are very, very difficult to get on to Medicaid. That will change if the Affordable Care Act and the individual mandate comes through. But there are a number of people in Sitka who are homeless, who have no jobs, and little means of supporting themselves, who do not qualify for Medicaid.”
The Affordable Care Act is currently under review by the US Supreme Court. If the Act is struck down, Sitka Community Hospital will continue to pay for charity services out of operating funds.
One other item is also outside Bennett’s control. The state capital budget lists $1.2 million dollars for a new hospital roof. The appropriation – like everything in the state budget – may be subject to a governor’s veto.
Bennett said the hospital had just completed its third year under a management contract by Quorum Health Resources – or QHR – with two to go.
Things were looking bright enough, he said, that the hospital had retained an attorney to begin preliminary negotiations on the possible purchase of the Sitka Medical Clinic.
The hospital already owns the Mountainside Health Clinic, and Oceanside Physical Therapy. After the meeting, Bennett told KCAW it was premature to say exactly how Sitka Medical would be integrated with its existing services.
