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Chattanooga: Losses at Erlanger increase from 2007

By: Emily Bregel
(Contact)

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Doug Arnold

Erlanger hospital lost more than $15.6 million in fiscal year 2008 — a bit more than the year prior — but a look beyond the numbers takes some of the sting out of that loss, hospital officials said Monday night.

Because of unfortunate timing, the hospital didn’t get some significant federal payouts on the record before the end of the fiscal year on June 30, and those funds could have offset losses for the year, said Jim Brexler at the hospital’s monthly budget and finance committee meeting.

At the meeting, committee members, officials and an independent auditor discussed the hospital’s final financial results for fiscal year 2008.

In the fiscal year, Erlanger spent significant funds gearing up for expected growth in volume that never happened, officials said.

“We’re feeling pretty good about this year. We did what we believed was absolutely the right thing to do,” Mr. Brexler said after the meeting.

The anticipated funds included a $2.4 million federal payment for hospitals that handle a disproportionate share of poor or uninsured patients, which Erlanger officials anticipated receiving before the end of the 2008 fiscal year. The funds instead will count in the current fiscal year, officials said.

Expecting growth in volumes similar to that in 2006 and 2007, Erlanger spent about $10 million to hire and train 250 more employees during fiscal year 2008, Mr. Brexler said. The hospital also added new adult and neonatal ICUs in anticipation of rising volumes.

The growth didn’t come, in part because of a slow flu season and an economic downturn that may have led many potential patients to delay care or elective surgeries, he said.

“That’s consistent with the entire marketplace. There was no growth in admissions across Tennessee and the region,” he said.

In fiscal year 2008, Erlanger’s losses from uncompensated care for the poor and uninsured grew to $81.6 million, compared with about $75 million the year prior, Doug Arnold, audit shareholder for the accounting firm Pershing Yoakley and Associates, said at the meeting. The firm conducted an independent audit of Erlanger’s financial records for the year.

The first two months of fiscal year 2009 are off to a more promising start, Britt Tabor, the hospital’s chief financial officer, said after the meeting.

So far this fiscal year, the hospital has brought in $1.67 million, compared to a budgeted gain of $1.45 million, hospital records show. In July and August 2007, the hospital brought in just $64,600, records show.

A worrisome trend for hospital administrators is third-party payers’ changing definition of what kinds of patients warrant a hospital admission and which are classified as “outpatient,” Mr. Tabor said. Hospitals are paid less for “outpatient” services, but those cases typically require the same intensity in resources as an admitted patient, he said.

The hospital recorded 171 more outpatient days in fiscal year 2008 than the year before, which correlates with a drop in patient admissions between 2007 and 2008, Mr. Tabor said.

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