WILLMAR -- The finance committee of the Rice Memorial Hospital board is recommending a $95.8 million budget and a 5 percent rate increase for 2008.
The proposed budget for the city-owned hospital will be voted on by the full board when members meet Nov. 14. It then will be forwarded to the Willmar City Council for final approval.
Hospital officials are aiming for an overall return of between 1 and 2 percent on $95.4 million in operating revenue for all of the Rice Hospital entities -- the hospital itself, which accounts for 90 percent of the consolidated budget, and the Rice Care Center and Rice Home Medical.
The hospital is projected to lose money again next year -- the third year in a row it hasn't sustained a profit -- but this loss is expected to be offset by a $2 million gain in non-operating income from the hospital's ownership share in the Willmar Surgery Center and the Lakeland Health Center.
Altogether, this should translate into a $1.7 million net profit for the hospital next year.
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The budget reflects a months-long effort by the hospital to accomplish a financial turnaround following a $2 million loss in 2006.
"We've got to get our bottom line to a positive. The next thing we have to do is get our operational bottom line to a positive," Bill Fenske, chief financial officer, told members of the finance committee at a meeting Friday.
Last year's red ink has been blamed mostly on declining patient volume. The number of admissions fell 4.2 percent in 2006 and dropped another 3 percent this year.
Hospital officials are cautiously projecting that patient numbers will start going up again, especially with new physicians in several key areas such as orthopedic surgery, gastroenterology and psychiatry.
Indeed, surgery cases began climbing earlier this year after the finalizing of an agreement between Rice Hospital, Affiliated Community Medical Centers and Alexandria Orthopaedic Associates P.A. of Alexandria to provide orthopedic surgery services in Willmar.
Overall, patient volume is projected to go up by 2.5 percent next year.
"You can see the direct impact providers have," said Lorry Massa, CEO of Rice Hospital. "If we can find the providers, the work is there."
"We believe our volumes have hit the bottom of the slide and we're starting to pick up a bit," Fenske agreed.
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Included in the budget is nearly $6 million for capital improvements next year -- an overhead canopy for the hospital's main entrance among them.
A cancer services joint venture that's under discussion with Affiliated Community Medical Centers is not reflected in the spending proposal. Fenske said that if and when the concept of the joint venture is approved, it will undergo a separate financial analysis.
