Erlanger Health System CFO Britt Tabor reported at Monday’s Budget and Finance Committee meeting that the total net income from operations for the first six months of the fiscal year ending on Dec. 31 is $19,472,219 compared to a budgeted loss of $9,844,456 and prior year loss of $8,644,660.
The positive budget picture took into account stimulus funds received in connection with the COVID-19 pandemic, the quarterly report says.
That is allowable under one governmental reporting standard (FASB), but GASB requires the stimulus funds to be reported as non-operating income, it was stated.
Tabor said, "Take out the COVID money and COVID expense, it's still very positive."
He said Erlanger has about $13 million in COVID funds remaining to be added to the income side. He said that should go through about June when the federal funds are exhausted.
Mr. Tabor said there has been some discussion about additional COVID funds for safety net hospitals like Erlanger, though he said the hospital is not counting on that money.
The total net income from operations for the fiscal year’s second quarter was $6.9 million, compared to a budgeted net loss of $4.8 million and prior year net loss of $5.4 million.
Mr. Tabor noted that even though inpatient volumes were less than expected, “Outpatient volumes continue to exceed expectations and significantly helped offset the inpatient revenue deficit.” “In December,” he added, “Erlanger experienced the highest number of COVID-19 patients and still managed the operations in a very safe and efficient manner. This is a testament to our staff, leaders, and our physician partners.”
He said due to the long stays in ICU by many COVID patients, the hospital had a loss overall on them.
Mr. Tabor told trustees that Erlanger admissions were 13.2 percent less than budget and 17.9 percent less than prior year. However, Erlanger East Hospital exceeded its budget by 22 percent and was consistent with prior year. Erlanger’s surgical inpatient volume for the second quarter was 9.5 percent less than budgeted and 10 percent below the previous year. Outpatient volumes exceeded expectations for the second quarter. Outpatient surgeries were 5.4 percent over budget and 3.6 percent more than prior year.
Mr. Tabor said, "East is hitting on all cylinders."
As with most hospital systems in the nation, Erlanger’s emergency room visits continue to lag behind prior year which impacts inpatient admissions. Emergency room visits were 31.1 percent less than last year and 26.5 percent less than budget with associated ER admits at 6.2 percentless than same time last year and 15.6 percent under budget. While emergency room visits have been fewer, the emergency room patients’ acuity levels are higher resulting in a higher conversion rate to inpatient status.
Officials said Erlanger's new quick care centers may be taking many of the patients that formerly went to the downtown ER.
Even with decreased inpatient volume, net patient revenue for the quarter was greater than prior year consistent and very close to budget, officials said. Officials said, "Factors contributing to Erlanger’s current revenue status were the health system’s strong outpatient volumes, increased surgical mix of patients, improved case mix index indicating a higher payment per discharge and a continued healthy payer mix. Medicaid/indigent/self-pay utilization was at 28.6 percent compared to a budget of 27.4 percent with commercial at 38.2 percent compared to a budget of 36.8 percent. Tabor noted that bad debt and charity care as a percentage of gross patient revenue was 9.48 percent, compared to a budgeted 10 percent.
On the cost side, management continued to manage cost appropriately based on volume fluctuations. Even with significant quarterly COVID-19 expenditures of $5.6 million, the cost per discharge was $9,699 compared to a budget of $9,333, it was stated. Mr. Tabor said, “We continue to monitor costs as volumes fluctuate during this pandemic. Expense management is key to ensure we reach our expected margin. In addition, the continued execution of the management action plan will ensure long-term success when the pandemic is over.”
“Erlanger is certainly not exempt from current industry trends in the United States, and I am proud of how our associates have continued to persevere despite the ongoing financial and operational challenges,” said Dr. William Jackson, Erlanger President and CEO. “Our leaders, managers, physicians, and staff have all done their part during these difficult and trying times, and it shows in our patient outcomes and financial performance. We have a strong workforce that is dedicated to providing the best medical care in our region, and I am thankful for their sacrifice and commitment.”