Rice finances break even for 2008
WILLMAR -- Rice Memorial Hospital's finances were just above the break-even point in 2008, according to the city-owned hospital's official audit that was released Friday.
The hospital and its associated entities -- Rice Home Medical and the Rice Care Center -- earned a $200,000 profit last year on gross revenue of more than $90 million.
Given the economic challenges facing the entire hospital industry, Rice turned in a decent financial performance during a difficult year, said Darryn McGarvey of the LarsonAllen consulting firm.
"Having a positive net margin is actually doing pretty well," he said.
The annual audit was reviewed Friday by the finance committee of the hospital board of directors. It will be forwarded to the full board this Wednesday.
Dale Hustedt, the hospital's interim chief executive officer, said after the meeting that he was pleased Rice managed to stay profitable.
The positive financial performance wasn't achieved without considerable pain, however. As patient volume last year fell behind projections, the losses began to mount. In August the hospital was forced to close two outpatient programs for managing diabetes and congestive heart failure, and laid off 13 employees.
"That's always very painful but it's what we had to do in order to finish the year where we needed to be," Hustedt said.
The hospital itself sustained a half-million-dollar loss last year. But revenue from Rice Home Medical and the Rice Care Center, which both earned a profit last year, helped cut the overall loss. Non-operating revenue from investments and other ventures such as the hospital's joint ownership in the Lakeland Health Center building also helped boost Rice as a whole into the black.
Rice earned $87.6 million last year in revenue -- a drop of almost $2 million since 2007. Expenses were $88.1 million. Non-operating revenue brought another $700,000 to the bottom line.
For hospital officials, one of the most pressing strategic issues is to break out of a cycle of financial stagnation and loss. Since 2005, the hospital's annual growth in net patient revenue has slowed. Between 2007 and 2008 it grew by only 2.9 percent.
Rice has been "consistently lagging behind our peers," said Bill Fenske, the hospital's chief financial officer. "We're not seeing the growth that we need here. That's frustrating for us because we always have to stay focused on expenses."
The hospital needs to find ways to bring in more business and increase its revenue, Hustedt said.
That's why referrals and a solid base of physicians and specialty care are critical, he said. "That's going to increase our revenues and that's going to be key."
Officials said it'll also be important to bill promptly and collect on outstanding accounts.
"There's some goals here," said David Anfinson, a hospital board member and chairman of the finance committee.