WILLMAR -- Rice Memorial Hospital will aim for at least a 2 percent annual profit margin for the next five years and will continue to build up its debt capacity to take on new projects.
These two goals are contained in a five-year financial plan that received an endorsement Friday from the finance committee of the hospital board of directors.
The committee will recommend approval of the plan to the full board, which meets Aug. 15.
Hospital officials said the plan provides a road map for Rice's financial direction through 2017.
Mike Schramm, chief executive officer, called it "a framework."
"These are our assumptions and best guesstimates at this point in time," he said. "We tried to be fairly conservative."
Among the assumptions: Patient admissions are likely to decrease 3 percent a year for the next five years, while outpatient volume will grow 1 percent a year.
The plan also calls for further strengthening of the hospital's balance sheet and cash position and increasing its ability to take on new debt.
Officials don't expect patient volume or revenue will undergo any dramatic changes in the next five years.
"We're not going to continue to hold onto what we have. Our inpatient activity is going to continue to decrease," said Bill Fenske, chief financial officer. "We're projecting very modest changes in the revenue coming through the door."
The plan is fluid and likely will be revised long before five years are up, he said. But based on all the financial assumptions and the hospital's current financial status, the hospital will achieve the targets outlined in the plan, including an annual profit margin of a minimum of 2 percent.
"If we're not hitting those levels, then we have to make some adjustments," Fenske said.
Meeting all the targets will be essential for Rice to remain financially healthy and add new services and technology, said Schramm.
"We've got to get to a level of operating performance and stay there, and we've got to build our balance sheet. It's the balance sheet that drives the strategy," he said. "These are the targets we believe we need to be at to be successful and do what we need to do moving forward."