Friday, November 27, 2020

Samaritan operating expenses may be higher than income in 2021

Staff Writer | November 19, 2020 1:00 AM

MOSES LAKE — Samaritan Healthcare will finish 2021 with a profit, but only because it has help from the the hospital district levy and its investments.

Chief Administrative Officer Alex Town last week said that Samaritan is expecting to finish the year with a $2.12 million profit, including other income, such as the levy, that will cover the projected shortfall from the hospital operation.

However, Town said the hospital is projected to lose about $1.2 million due to higher expenses and an unexpected cut in reimbursement for Medicaid and uninsured patients.

In an interview Friday, Town said Samaritan is reimbursed for treatment it provides to uninsured patients and people on Medicaid. Hospital officials were notified in early November that those payments would be cut by $3 million.

“Definitely that’s impacting us,” he said.

Town said the hospital district probably won’t meet its budget targets for the amount of available cash.

“At the end of the day, what really matters is the cash,” he said. (The budget category is called “earnings before interest, depreciation and amortization.”)

The target is to have available cash equivalent to about 10% of the budget. In Samaritan’s case that would be about $12 million. For 2021, the available cash is projected to be about $9 million.

That money doesn’t sit in a bank. It’s used to pay for services, buildings and equipment as the year goes along.

“It’s money you use, you invest back into the organization,” Town said.

Samaritan is one of about 10 hospitals statewide that qualify for Medicaid and uninsured patient reimbursement, which is paid to hospitals with large numbers of those patients. That payment could be restored, but there’s no way to know yet, Town said.

Samaritan officials will be taking the reduction into account when making spending decisions in 2021, he said.

There are other factors that will affect income. Hospital district officials have hired more doctors, physician assistants and nurse practitioners, and revenue is expected to increase as a result. But more medical professionals also mean more staff and equipment, so expenses are projected to go up as well, Town said.

In addition, some insurance carriers are cutting payments and shifting more of the costs to patients, Town said. Bad debt and charity care expenses are projected to increase also.

The hospital recently instituted a new medical records system, and that will have an effect on income as hospital staff and insurers get used to it, Town said. Planning for a new hospital was started in 2019, and hospital commissioners confirmed earlier this month that they are committed to continuing the project. Some expenses are associated with that.

Town said hospital officials expect to see increases in medical and surgical admissions, but a drop in obstetrics cases. General surgeries are expected to decrease, since one of the general surgeons who uses Samaritan is leaving and hasn’t yet been replaced.

Revenue from the Pioneer and Patton clinics is projected to increase, since more medical professionals have been added and are offering more services. Revenue from other services, like the lab, pharmacy and diagnostic imaging, is projected to increase as well.