One year after budgeting for a bottom line in the red for the first time, Erlanger Health System officials are aiming for a much higher mark.
Hospital officials have budgeted to end the year with $18.4 revenues from operations, with a $10.8 million surplus on the bottom line. Last year, the hospital was aiming for a $4.5 million deficit as it attempted to climb out of months of losses.
“This is an aggressive budget,” Erlanger CEO Kevin Spiegel told the hospital’s budget and finance committee, which unanimously approved the new budget after an hourlong closed meeting.
The budget, which the entire Erlanger board will vote on Thursday, includes $8 million to put toward a new orthopedic specialty surgery wing, a $2.7 million MRI machine, and nearly $3 million in upgrades to the hospital’s cardiac services — part of a revamped strategy to capture more of Chattanooga’s heart care market.
The confidence boost between now and this time last year, said Erlanger Chief Financial Officer Britt Tabor, comes largely from savings initiatives put in place that included outsourcing food services, getting on a new pharmacy plan to lower the cost of drugs and moving employees off the hospital’s pension plan and into new retirement accounts.
Many of those initiatives will begin to show fruit this year, said Tabor.
Some in the budget meeting, which included an outside budget review board, questioned whether the budget left enough wiggle room for the hospital to react to unforeseen adversity.
Once again, there are questions this year of potential Medicare and Medicaid cuts, along with uncertainty of whether the state will decide to expand TennCare — which could have a sizable impact on the hospital’s finances.
David DiStefano, chairman of the budget review board, asked Erlanger officials if they had contingency plans in place in case something occurred similar to early this year when a couple of snow days hurt the hospital to the point that officials decided to freeze employee vacation time.
A windfall of federal funds helped boost the hospital back into the black, but Spiegel said that the situation proved that the hospital was able to flex in a more “market-based approach” to finances than it had in years past.
The hospital is looking to end the 2014 fiscal year in much better shape than it budgeted for. It’s last budget figures were tracking toward a $17.5 million profit.
This year’s budget also included putting $2.7 million toward raises for registered nurses, as part of a two-phase process, said chief nursing officer Jan Keys.
For the first time, the amount for each nurse will be determined by a new rubric, which has nurses divided into tiers based on years of service, education level and competency.
Contact staff writer Kate Harrison at firstname.lastname@example.org or 423-757-6673.