Community Hospitals & Wellness Centers of Bryan, a not-for-profit organization, plans to trim $3.9 million from its 2010-11 fiscal year budget.
Phil Ennen, CHWC president and chief executive offi cer, said closing the emergency room and inpatient care facilities at the Archbold Medical Center saved CHWC about $1 million per year.
To make up the additional savings, Ennen announced several changes will impact employees, from a secondyear freeze on pay raises to changes in vacation pay and the employee health plan.
The changes were approved at a recent meeting by the CHWC board of directors.
CHWC is also in line to benefit from a reduction in Ohio’s Medicaid tax on hospitals. Earlier, Ennen had said CHWC was paying out $800,000 a year to Ohio, which the state was using to leverage additional Medicaid payments from the federal government.
In a Sept. 15 memo, Ennen told employees, “Governor Strickland has announced an immediate effort to reduce the burden of the Ohio Hospital Medicaid Tax. The proposal will reduce the hospital tax by $500,000.
“Even though the federal government has not yet accepted the proposal, we believe the changes will be agreed upon very soon.”
Also, Ennen said the hospital will restrict new equipment purchases to absolute need. He estimated savings in that area alone of $173,000.
In the memo, Ennen said hospital officials are projecting in 2010 the organization will lose $3.6 million, based on $75.2 million in net revenue and $78.8 million in operating expenses.
CHWC finished 2009 $1.3 million in the red, on net revenue of $77 million and operating expenses of $78.3 million.
CHWC was in the black in 2008, based on net revenue of $79.4 million and operating expenses of $76.8 million, leaving a $2.6-million positive cash balance to start the next year.
Hospital administrators project net revenue will remain flat or stagnant, at about $75 million, for 2010, 2011 and 2012.
“Therefore, expenses must be reduced below the revenue projection for the hospital to become profitable immediately. Therefore, our budgeted expenses must be less than $75 million, and sufficient to generate at least a 1% profit of $750,000.”
Ennen said the $3.9 million in reductions contained in the memo, “in combination with other budgetary changes we have been able to identify, are sufficient to generate a 1.6% operating margin for the next budget year.
“I believe the changes will be enough to stabilize the hospital financially and put us into position to work with the medical community going forward.”–David Pugh