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Hospital officials propose conservative budget for 2009

WILLMAR -- As patient volume continues to lag, Rice Memorial Hospital is scaling back one of its key budget targets for next year.

The city-owned hospital is shooting for a conservative 1.1 percent financial return, instead of the more ambitious goal of 2.8 percent laid out in the hospital's five-year plan.

A better operating margin can't be achieved without further staff cuts -- a move that would make it harder for the hospital to adjust to fluctuations in patient numbers, officials said Friday.

"We're as low as we believe we should go with our staffing," said Bill Fenske, chief financial officer.

The finance committee of the hospital board reviewed the proposed 2009 budget Friday and voted to recommend its approval next week by the full hospital board.

Operating revenue is projected at $91.8 million next year and expenses at $90.8 million. The budget also includes a 5 percent rate increase.

Fenske said Friday that the hospital will likely break even for 2008.

The slashing in August of two outpatient programs and 13 staff, totaling $3 million, appears to have helped stem the financial losses that began to build up during the second quarter of 2008. Without the cutbacks, the hospital would have been facing a $1.6 million loss by the end of the year, Fenske said.

With patient volume essentially flat, however, Rice can't boost its operating margin for next year unless it reduces staffing levels even more, which administrators say they're unwilling to recommend.

"We felt it was important that we brought a budget that was realistic," Fenske said.

The hospital's census averages 46 patients a day, but on any given day it can fluctuate from 37 to 69.

Maureen Ideker, chief nursing officer, said Rice has been adjusting to low-census days by sending nurses home or asking them to take voluntary or mandatory time off.

"The teamwork has been excellent in terms of addressing these variabilities," she said.

But if staffing levels slip too low because of more cutbacks, the hospital won't be able to respond to the high-census times, and patients might have to be turned away or transferred to another hospital because of insufficient staffing, she and Fenske said.

"Our staffing is pretty tight right now," Fenske said, noting that layoffs have recently occurred at Twin Cities hospitals and in Rochester.

"Everybody is just really struggling with these volumes right now," he said.