Erlanger 2nd Quarter Net Loss Is Higher Than Expected

  • Monday, January 20, 2020

Erlanger Health System had a total net loss from operations at the end of the second quarter of $5.4 million, compared to a budgeted net loss of $798,067 and prior year income of $1.35 million.  Total net loss for the quarter was $6.8 million compared to a $2.8 million budgeted net loss and prior year net loss of $1.09 million. 

 

Britt Tabor, chief financial officer, said that even though second quarter net income was less than expected, “December proved to be an excellent month, exceeding budget projections by $3.9 million.”  “In December,” he added, “Erlanger inpatient surgeries were on budget and most outpatient volumes exceeded both budget and prior year levels.  Cost per adjusted admission was also less than budget and prior year.” 

 

Mr.

Tabor said there were a number of contributing factors to lower than projected revenues and volumes for the second quarter.   Although emergency room visits were 5.2% more than last year and 4.5% over budget, ER admits were 18% less than same time last year and 22.6% under budget. Mr. Tabor reported that Erlanger’s ER conversion rate to inpatient status was 16% compared to a budgeted 21% and prior year conversion rate of 20%. 

Net patient revenue for the quarter was consistent with the previous year and 4.3% under budget. Other factors contributing to Erlanger’s current revenue picture was the health system’s indigent/self-pay utilization which was 13.2% higher than the same period last year and almost 15% over budget. Mr. Tabor noted that bad debt and charity care as a percentage of gross patient revenue was 10.5%, compared to a budgeted 8.08%.  In addition, Erlanger’s Medicare utilization came in at 3% less than last fiscal year and was 5.4% under budget. 

Total uncompensated care costs for the second quarter of this fiscal year is estimated at $74.2 million, putting Erlanger on track to provide $10 million more in uncompensated healthcare services to this community than last year.

Mr. Tabor told trustees that Erlanger admissions remained consistent with the prior year and were 7.5% under budget.  Erlanger’s surgical inpatient volume at second quarter was 7.1% less than budgeted, but only 2.9% below the previous year. The number of inpatient heart surgeries was 13.7% less than last year and 14.8% under budget.  Neurosurgery inpatient surgeries were 11.1% less than last year and 15.1% under budget. 

 

During his second quarter financial report, Mr. Tabor expressed confidence in the six teams comprising Erlanger’s “Expense Management Committee” to achieve substantial savings during the current and fourth quarters.  “We expect to meet our goal of exceeding budget projections and getting to 40,000 admissions by June 30, while delivering quality service at the right cost,” he told the committee.  Among those goals are “using overtime more appropriately, staffing to volumes, streamlining decision making and providing extended weekday and weekend hours for surgical and elective procedures,” he said.

 “We continue to project continued growth this fiscal year,” Mr.  Tabor told trustees, “but at a slower rate than what was projected for 2019.”   

 

 

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