A comparison between 2018 and 2019 showed some departments were up and some down at North Shore Health.
North Shore Health Finance Officer Vera Schumann presented 2019 fiscal year-end information to the hospital board at the board’s January meeting.
More patients used the acute hospital beds and swing beds in 2019 than in 2018, while care center days were less than budgeted for but equivalent to 2018.
FTEs were 108.5, which is 4.9 less than budgeted for in 2019.
Salary expense as a percentage of Net Patient Revenue was 40.7 percent compared to the budgeted 41 percent.
Payer mix—the percentage of hospital revenue coming from private insurance companies versus government insurance programs such as Medicare, Medicare Advantage, Medicaid versus self-paying patients— changed from 2018 to 2019.
The mix is important because Medicaid and Medicare typically pay hospitals less than what it costs to treat patients.
Had the payer mix remained the same from 2018, the contractual adjustment would have been 10.4 percent rather than 15.9 percent. Schumann found that when reviewing the payer mix, no trends could be identified; however, she noted that the payer mix would continue to be monitored. Total deductions from revenue are $2,371,000, $671,000 or 39 percent over budget and $604,000 or 34 percent over last year.
The year-to-date gross patient revenue was $19,425,000, which was $128,000, or 1 percent, over budget. That was $604,000, or 34 percent over last year’s budget.
The colonoscopy and CT/MRI departments were over budget, and the observation, emergency department, physical therapy and occupational therapy departments, laboratory, home health, and ambulance were under budget for the year.
Daily operating expenses were $17,000, or .09 percent over budget.
North Shore Health picked up 2.5 days of cash on hand, bringing the total to 154.4 days of cash on hand.
How healthy are Minnesota hospitals?
The Minnesota Hospitals Association (MHA) released its annual report on the financial health of Minnesota’s hospitals and health systems, and the report showed median operating margins declined to 1.7 percent in 2018 from 2.3 percent in 2017.
Causes for the decline include pressure to reduce costs from the government and commercial payers, increased health care professional shortages, an increasing cost of products and supplies such as pharmaceuticals, medical devices, and new technology systems for electronic records.
While 51 hospitals and health systems surveyed generated positive operating margins for 2018, the MHA found 27 hospitals— or 34 percent of the hospitals and health systems surveyed– experienced negative operating margins in 2018, and 26 in 2017.
The report also noted that in recent years Minnesota’s commercial health plans had taken steps to cut payments to hospitals, especially rural hospitals, despite the burden this shift in finances costs rural hospitals being able to provide quality care.
In summation, the MHA stated, “The combination of more patients covered by government programs and reimbursement cuts form commercial health plans increases the likelihood of hospitals experiencing low or negative operating margins.
“While urban and rural hospital median operating margins have been divergent, the trend in recent years has been convergence with urban and rural hospitals showing downturns in 2018.”
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