Rice Hospital proposes 2010 budget of $100 million
WILLMAR -- Rice Memorial Hospital officials are optimistic the city-owned hospital is managing to successfully adapt to fewer patient admissions, a mood that's reflected in the budget developed for 2010.
Members of the hospital board's finance committee had their first look Friday at a proposed budget for next year of just under $100 million.
It's based on a projected daily census of 40 inpatients, the lowest level of inpatient volume in officials' memory.
But in spite of the shrinking census, the hospital budget is projecting a $1 million margin next year, or the equivalent of a 1 percent return.
Rice is on track to earn a modest profit this year as well. As of the end of September, the hospital and its associated entities, Rice Care Center and Rice Home Medical, showed a $600,000 net profit.
After struggling with stagnant or negative margins the past four years, it's a sign that Rice may be turning the corner, said Bill Fenske, the hospital's chief financial officer.
"This was the easiest budget that I've ever had. I'm so proud of what our directors have done," he said. "It really is a testament to the directors saying, 'We're all in this together.'"
The finance committee voted Friday to recommend adoption of the budget by the full hospital board at its meeting next week.
Although inpatient numbers continue to rise and fall on a day-to-day basis, "it doesn't impact much what the trend has been," said Mike Schramm, chief executive of Rice. "The challenge is trying to get it right as best we can with the budget. You don't want to go too far and yet you want to be realistic in budgeting where the trends are going."
In just four years, patient admissions have fallen from a peak of almost 5,000 in 2005 to just over 4,000 this year, a drop of more than 15 percent.
This shift in the hospital's business has been balanced by a rise in outpatient services such as laboratory testing and emergency care -- a shift that is being experienced by most hospitals across the United States. According to projections, outpatient services will make up 57 percent of Rice Hospital's revenue next year.
It has taken some internal adjustment to these trends, but Rice officials said Friday that the budget projections show expenses are being managed and the hospital's cash position is strengthening.
"It's those controllable expenses we're going to have to continue to be diligent about," Schramm said.
It's an area that will be pushed aggressively next year, Fenske said. Just this past week, he met with a Voluntary Hospitals of America consultant to look at how Rice could save $500,000 to $600,000 a year with tighter inventory control.
"That money goes right to cash. We just need to be more efficient," he said. "In my mind we just really need to hang in there until some of our growth initiatives come to fruition."
Rice officials have been working for more than two months on a new strategic plan that will help guide future decisions about adding or expanding services. If new initiatives can be successfully launched, the hospital will be able to increase its operating income and rely less heavily on non-operating income, primarily from joint ventures and investments, to make up the bottom line, Fenske said.