Lawrence Memorial Hospital officials learned Wednesday that 2001 was a healthy financial year for the city-owned facility.

Increases in both inpatient and outpatient services fueled a 56 percent increase in the hospital’s operating income, LMH board members were told Wednesday at a monthly meeting.

Operating income increased to $2.16 million in 2001 compared to $1.38 million in 2000. The increase marked the second straight year the hospital has improved on its bottom line.

“I think our performance this year once again demonstrates that we are providing the type of service the community wants and that the community has confidence in the service at LMH,” said Gene Meyer, LMH president and CEO.

The hospital’s net patient income increased by about 11 percent to $83.19 million in 2001. Leading the way for the increase was a jump of about 14 percent in the hospital’s revenues from outpatient services, which generally are procedures that don’t require patients to stay overnight in the hospital.

Meyer said the hospital’s investment in LMH South, an outpatient service center at Kasold Drive and Clinton Parkway, was helping fuel financial gains, in addition to nearly $5 million worth of investments during the past two years to add a new CT scanner, MRI device and an oncology department to the hospital.

“I don’t think it is just a coincidence that our financial performance has been improving at the same time we have undertaken some of these quality improvement programs,” Meyer said. “They go hand and glove.”

The 2001 numbers continue a turnaround from the late ’90s when the hospital posted losses of $1.17 million in 1998 and $1.63 million in 1999. The hospital was suffering from a high amount of uncollected bills resulting from an inefficient billing and collection system and from losses associated with Community Health Plan of Kansas, a health insurance company the hospital owned.

Since then, the hospital has made changes in its billing and collection system to reduce the amount of unpaid bills, and has closed Community Health Plan of Kansas.

The hospital in 2001 did take losses on some of its investments. LMH posted a roughly $157,000 loss as part of its ownership interest in the Lawrence Surgery Center, but that is an improvement over the $489,000 loss posted in 2000.

The hospital also suffered approximately $177,000 in losses during 2001 as part of its ownership interest of Premier Health Inc., an insurance company that agreed to offer coverage to members of the Community Health Plan of Kansas after it was closed.

But the losses weren’t enough to stop the hospital from posting a profit, which is important, Meyer said, because even though the nonprofit facility is owned by the city, it does not receive any city tax support.

“I get asked all the time why it is important for a not-for-profit hospital to make money, and the answer is because if we were a hospital that only broke even or lost money, we wouldn’t have the ability to invest back into the hospital, add services and make improvements in how we serve the community.”