“Are we lucky or smart?” asked Chuck Heath, finance committee chairman, of Lawrence Memorial Hospital.
He made the comment at Wednesday morning’s Board of Trustees meeting after hearing a gleaming audit report.
While the comment provoked laughter, the auditor would later answer it’s a little of both.
“I think their decisions in the past have put them in a strong position to weather any potential economic downturns,” said Angela Miratsky, senior manager of the Kansas City, Mo.-based accounting firm BKD, which did the audit. “The hospital is well positioned to face the current economic times.”
“They must see well into the future or something,” she said with a laugh.
The nonprofit hospital ended 2008 with an operating income of $8 million.
LMH had $151.8 million in operating revenue compared with $137 million in 2007, which was a 10.6 percent increase. This was a result of a record amount of activity. There were 217,000 outpatient visits, 6,295 inpatient discharges, 35,428 emergency room visits and 1,113 births.
Total operating expenses of $143 million in 2008 increased by $16 million or 12.6 percent compared with 2007, primarily because of the increased expenses of taking care of patients and costs associated with construction.
In 2008, construction of the new emergency department was finished, the remodeled intensive care unit and new nursing units opened, and the expansion and remodeling of the Family Birthing Center was completed. Work also began on the new surgery department, which was the final phase of a three-year, $45 million expansion project.
During the past five years, LMH has reinvested $90 million into capital additions.
Miratsky said the timing of the expansion project was good because many hospitals delayed such projects and are now putting them off even longer.
“The smaller hospitals, especially in the state of Kansas, have got older facilities. I think they’ve had plans in the last couple of years to do a lot of rebuilding or a lot of renovations and the credit crisis has halted a lot of those plans,” she said. “Lawrence Memorial, again, has been very proactive.”
LMH President and CEO Gene Meyer said it was probably a combination of being lucky and good timing.
“We had access to capital. The construction market was in a pretty negotiable state and so it provided the opportunity for us to fund the project and get through the project in the most effective way that we could have.”
The hospital also is very conservative in its investing.
Miratsky said she has seen some hospitals lose between 30 and 50 percent of their investment. That’s not the case with LMH. It invests in government bonds and treasuries and corporate bonds.
“The fixed-income market hasn’t been hit quite as much by the declines as the equities and stock market,” Miratsky said.
Overall, she said the hospital has “done very well” compared with others.
Besides delaying much-needed upgrades, Miratsky said other hospitals are laying off workers and implementing strategies to reduce costs such as sending nurses home without pay if patient volume is low.
“A lot of hospitals would love to be in Lawrence Memorial’s position,” she said.