New hospital will impact Samaritan bottom line in 2024
Samaritan Healthcare commissioners and Chief Executive Officer Theresa Sullivan turn over the ceremonial first shovels of dirt for the construction of the new Samaritan Hospital in October 2023. The costs associated with the construction will have an impact on Samaritan's 2024 budget.
FILE PHOTO
MOSES LAKE — While revenues for Samaritan Healthcare are projected to increase in 2024, Samaritan’s budget will reflect the current project of a new hospital and will be in the red as a result.
Samaritan is projected to finish 2024 with a loss of $21.61 million, but Chief Executive Officer Theresa Sullivan said most of that is a reflection of financing for the new hospital.
“This is the part that’s really confusing about depreciation expense,” she said. “Most expenses, you’re writing somebody a check. This is not actual money going out the door. So the margin looks negative because we’ve got this non-cash expense. But it’s not.”
Most of the hospital construction is being financed out of a combination of a voter-approved construction bond and a low-interest loan. Samaritan does pay back the loan through hospital operations.
“The bond doesn’t pay for the whole hospital (construction),” Sullivan said. “So the hospital is paying roughly half out of (hospital) operations.”
Chief Administrative Officer Alex Town said analyzing the financing for the new hospital was part of determining whether or not the hospital could be built.
“We know (the net income) is going to be negative because of the building project,” he said.
In the 2024 budget, Town said hospital officials are projecting more patients will be using Samaritan Hospital and its two clinics. A slight increase is projected in hospital admissions, and more business due to expanding surgical services. That will mean increases in support services, like the pharmacy and lab. Outpatient treatment also is projected to increase, due to more outpatient surgeries and more emergency room admissions. New medical professionals joined the staff at the two clinics during 2023, which is projected to add more patients.
The cost of bad debt and charity care is projected to increase. The Washington Legislature changed the qualifying requirements for charity care in 2022, making it available to more patients.
Samaritan staff is projected to increase in 2024 to the equivalent of 700 full-time employees.
Expenses are projected to increase due to more business, and due to rising costs for both goods and services.
While salaries and benefits are expected to increase, temporary worker expenses are projected to decrease. Expenses for supplies and utilities are projected to go up.
Hospital officials conducted feasibility studies as part of the process of applying for a loan, and Town said during a November meeting that those studies would provide some guidance.
“We will be starting to look at our feasibility studies numbers, to make sure how we compare to our operational budget to make sure we’re still within our guidelines,” he said.
Patient fees will increase, but they are subject to market forces.
“There’s a certain percentage our contracts (with insurance companies) allow us to increase. We do take into account there are inflationary costs, but we also (want to be) pricing our charges appropriately. We want to make sure patients come to our facility, and patients are shopping because of high deductibles. We want to make sure we’re competitive,” he said.
“So when we do hear that, hey, we’re priced higher in this procedure, we take that feedback and we evaluate (the pricing). Because we don’t want to get into a situation where we price ourselves out of the market. We want to be competitive.”
Town said one of Samaritan’s challenges is that some patients are kept in the hospital after they could be discharged because there’s nowhere they can go. Chief Medical Officer Andrea Carter said the challenge gets tougher on weekends when admissions offices in some of the places they could be transferred are closed.
“So we’ve got some work to do there,” Town said.
Hospital revenue fluctuates throughout the year, trending lower in the summer and going up in the winter, especially in the fourth quarter of the year.
“People have met their deductibles and they get all their surgeries done in the last quarter,” he said.
Cheryl Schweizer can be reached via email at cschweizer@columbiabasinherald.com.