The Affordable Care Act says 2014 is the year more Americans are supposed to have insurance, but the new budget for Lawrence Memorial Hospital isn't counting on it.
LMH's board of trustees on Wednesday approved a 2014 budget that estimates the hospital will remain profitable in the coming year but at lower levels than in past years. That's despite the fact that the Affordable Care Act calls for more Americans to be insured in 2014.
"There has been so much uncertainty around the insurance exchanges, we didn't feel like we could count on any significant new revenue from newly insured people," said Joe Pedley, the hospital's chief financial officer.
The 2014 budget for the nonprofit hospital calls for operating revenues to exceed expenses by about $7.1 million, which is down from a $9.5 million surplus in 2011 and $8.3 million in 2012.
Hospital leaders, though, are counting on a bit of turnaround in 2014. The $7.1 million operating surplus would represent a significant turnaround from current trends at the hospital. LMH is on pace to finish 2013 with an operating surplus of $4.3 million, which would be its lowest total in recent years. The hospital had budgeted for about an $8.5 million surplus in 2013.
The hospital is budgeting for an improved 2014, in part, based on an expected increase in business at LMH-owned physician practices. LMH has added physicians and extended some clinic hours, which will allow the number of patients seen at the practices to grow by a projected 17 percent.
Pedley, though, said the hospital's growth will be constrained by the impacts of the federal sequestration and the state's decision to not expand the Medicaid program. As part of the Obamacare legislation, hospitals nationwide agreed to less favorable Medicare reimbursement rates with the idea that Medicaid programs would be expanded to cover many patients who currently are using the hospitals without insurance.
But the Supreme Court ruled that states are not required to expand their Medicaid programs. Kansas and several other states have opted not to expand their Medicaid programs, which has left hospitals staring at a different cost equation.
"We got the Medicare cuts, but they were supposed to be offset with more people being insured," Pedley said. "That hasn't happened yet."
The federal sequestration also required a 2 percent cut in Medicare reimbursement rates to hospitals. Pedley said the hospital isn't budgeting for the sequestration to be lifted in 2014.
Overall, the hospital's budget calls for $202 million in operating revenue in 2014 compared with a projected $191 million for 2013. Expenses are budgeted to check in at $195 million for 2014 compared to $186 million for this year.. The budget calls for the hospital and its physician practices to have 1,138 full-time equivalent positions in 2014. That's up about five positions from 2013.
In other news from Wednesday's LMH Board meeting:
• Board members were told the hospital again was included on a list honoring the top 100 hospitals in the country. LMH was named to the 2013 Top 100 HealthStrong Hospitals by IVantage Health Analytics. The company rated the hospital based on its competitive strength in the market, a host of patient outcomes and affordability measures, and LMH's financial strength.
The award marks the third time this year that LMH has been named to a list of top 100 hospitals in the country.
• It was announced one of the top accreditation organizations in the hospital industry has recognized a trio of LMH services as among the best in the country. The Joint Commission has announced LMH's heart attack care, pneumonia care and surgical care have been named to the organization's "Top Performer" group. The designation means the hospital ranked in the top third of all U.S. hospitals measured. This is the second year in a row LMH has been honored in the three categories.
• The hospital became the first hospital in the state to be designated a High 5 for Mom & Baby hospital. The program recognizes hospitals that have taken special steps to encourage new mothers to breastfeed their infants.
• Board members were told the hospital has reached a preliminary agreement to hire an endocrinologist. LMH officials have been working to hire an endocrinologist for several years because people with advanced diabetes or thyroid problems often have been leaving town to visit and endocrinology specialist. LMH expects the new doctor to begin practice in September.