Natchez Regional Medical Center trustees, supervisors ratify hospital’s budget

Published 12:15am Saturday, September 28, 2013

NATCHEZ — Natchez Regional Medical Center’s budget for the next fiscal year projects a $657,566 deficit in net incomes.

The county-owned hospital’s administrators and members of the NRMC board of trustees met with the Adams County Board of Supervisors Friday to discuss and ultimately ratify the hospital’s budget for the 2013-2014 year starting Oct. 1.

The hospital will end the current fiscal year with an annualized $4,553,130 in net income after meeting $48,161,650 in expenses, up from $46,825,0907 in the previous fiscal year.

The hospital received $241,945,547 in revenue in 2013, up from $219,580,527 in 2012.

NRMC Chief Financial Officer Charles Mock said the hospital projects in 2014 its revenue will be $230,716,703, and that the significant jump between 2012 and 2013 was attributable to “some events that happened this year that won’t happen again.”

When Supervisor Mike Lazarus asked Mock if the hospital’s lawsuit settlement with Quorum Health Resources was reflected in the 2013 revenues, Mock simply responded, “That (number) includes total revenues for the hospital.”

NRMC settled in November 2012 a $42 million lawsuit against QHR, filed on the charge that as the hospital’s management company QHR had misdirected NRMC so significantly that the hospital’s 2008 bankruptcy became inevitable.

The lawsuit was settled before reaching trial, and was sealed at the request of QHR. NRMC Board Attorney Walter Brown said recently QHR was willing to double its settlement offer to have the case sealed.

The results of the settlement have never been made publicly known, and even the county supervisors do not know the results of the negotiations.

After deducting $189,230,767 for revenue deductions and charity and $48,161,650 in operating expenses, the hospital projects it will have a net income from operations of $4,553,130 at the end of the 2013 year, Mock said.

Even though the hospital plans to have approximately $11 million more in revenues in the coming year than in 2012 — the last year that did not have the one-time event to which Mock alluded — the budget projects $186,240,340 in revenue deductions and charity and 45,133,929 in operating expenses, leading to the $657,566 deficit.

The hospital is also budgeting for $500,000 for equipment for unexpected repairs and expenses.

Mock said that while NRMC expects to make approximately $1 million in hospital operations, it will lose approximately $2 million in clinic operations.

Approximately 70 percent of the bad debts and charity the hospital will have to absorb will originate within zip code 39120, Mock said.

Hospital operations can expect to continue to see a decline in revenue in coming years because the implementation of the Affordable Care Act will mean fewer people will need hospitalization, he said.

“The game plan is to get people more well and get things taken care of on a home basis rather than on a hospital basis,” he said.

Lazarus asked what the long-term plan to offset costs for the hospital could be.

“Do we keep the same amount of staff knowing that less people are gong to be going to the hospital?” he said. “If we know where the climate is going, that less and less people are going to the hospital, we need to make a preparation for this.”

Supervisor David Carter likewise expressed concern that the hospital’s patient census might be low, to which Chief Executive Officer Bill Heburn responded the hospital had its best month in clinic profitability in three years. Chief Administrative Officer Donny Rentfro said two weeks ago the hospital had its highest census since February.

Carter said it was his perception that more patients were going to Natchez Community Hospital, to which Heburn responded that was largely perception.

“(Patient census) ebbs and flows everywhere,” he said. “When we had the high census two weeks ago, Community looked like a ghost town.”

Alluding to a statement Heburn made at the public hearing about the potential sale of the hospital earlier this month, Carter said he wanted to be sure the county has a plan to ensure the hospital doesn’t shut down in two years if it isn’t sold.

“We work pretty damn hard at making sure that isn’t the case every day,” Heburn said.

Mock agreed, saying, “Management is not going to sit on its thumbs and let this close in two years.”

Heburn said despite the financial discussion, NRMC is primed to face the future, with clinic operations already in place similar to what the Affordable Care Act will encourage in all hospitals.

“The hospital is in far better shape than it has ever been, physically, in cleanliness and infection control,” he said. “It is a very good hospital, you just don’t have all the money to go all the way.”

The hospital administrators also gave the supervisors a brief update about the ongoing effort to sell the hospital, saying negotiations with several potential stalking horse bidders are ongoing and they hope to have a final agreement by mid-October.

A stalking horse bidder agrees to a price to purchase the hospital, and when the hospital goes to auction the stalking horse bid is considered the base price all other bidders have to beat.

If no one outbids the stalking horse, the hospital will automatically be sold to the stalking horse.

Hospital administrators have said NRMC must be sold in order to meet the logistics and costs associated with the implementation of the Affordable Care Act, which they said makes operating an independent, rural hospital difficult.