photo by: Austin Hornbostel/Journal-World

LMH Health President and CEO Russ Johnson speaks during the hospital's Board of Trustees meeting on Wednesday, Jan. 31, 2024.

Though LMH Health officially posted an operating loss north of $5 million in 2023, the hospital’s leader thinks there are some strategies to avoid a similar outcome by this time next year.

At Wednesday’s LMH Health Board of Trustees meeting, LMH Health President and CEO Russ Johnson informed board members that the hospital’s final operating loss for 2023 was $5.6 million, similar to the hospital’s reported losses through October 2023 that Johnson shared at the board’s November meeting. Later on, the board also approved a 4% raise for Johnson entering the new year.

“… In (the past) four years, this is as difficult and as challenging a time as we have felt, emerging out of the pandemic,” Johnson told the board. “The very disruption to the financial underpinnings of hospitals and their balance sheet and their operating margins is (happening) nationwide, and we feel it, too.”

But Johnson later said that despite the operating loss, LMH Health’s balance sheet “actually got stronger” — the hospital added about 16 days of cash to its organization and has no additional short- or long-term liabilities. He said that means LMH can be “optimistic” about its future.

Turning those losses around in 2024, Johnson said, will take a few different strategies. He said one of them will be continuing to grow the organization and adding new services, staff and technology. Another big change he highlighted was the ongoing expansion and renovation of the LMH Health Cancer Center, which he said would keep more patients from leaving the community for that care.

Despite the financial challenges still in play for LMH, the board decides annually, usually in January, how much Johnson will be awarded in additional compensation for the prior year — and whether he’ll get a raise in his base salary. Johnson’s base salary for 2023 was $550,014.40.

The board decided in an executive session that Johnson will indeed be given a raise this year, the details of which were shared with the Journal-World in a news release following the meeting Wednesday morning. He’ll receive a “standard 4% cost of living increase” that will be extended to all LMH Health employees in April, bringing his new base salary to $572,015. The board approved a five-year contract extension for Johnson to remain on as CEO in October 2023.

Johnson was also eligible for up to 35% of his 2023 base salary in “variable compensation,” which is paid only if specific annual goals are met. The board found that Johnson met about half the annual goals set out in that compensation package and will receive $87,108.53, or 45.25%, of the total compensation available. Revenue objectives comprise half of the award, and LMH didn’t hit its 2023 revenue goals.

“Taking into consideration Russ’ long career in healthcare management, including his seven years as LMH’s CEO, and the market factors for similar sized hospitals in our geographic area, the trustees’ goal is to raise Russ’ salary from the lower half of the market to the market midrange,” Board Chair Pat Miller said in the release. “Being a hospital CEO is a demanding job requiring a highly honed set of skills and the ability to navigate a range of issues every day that are unlike any other industry.”

Earlier in the meeting, Miller highlighted some of LMH’s challenges outside of its individual finances, namely the struggle to garner legislative approval for Medicaid expansion in Kansas. The board earlier this month approved a letter voicing support for Gov. Laura Kelly’s proposed expansion plan, and at Wednesday’s meeting took additional action to ramp up its ability to advocate for hospital-friendly policies at the state level.

“Expanding Medicaid is the first step — not a silver bullet for health care, but giving up on Medicaid is equivalent to giving up on rural hospitals,” Miller said. “LMH Health feels the pressures the governor describes.”

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One item that wasn’t discussed at Wednesday’s board meeting was the progress of the search for a new top financial executive. As the Journal-World has reported, the hospital’s last chief financial officer, Mike Rogers, was terminated in November 2023 — after only about a month in the role — when it was revealed that he’d taken “elaborate steps to conceal his true work history and criminal record” as a convicted felon. Rogers legally changed his name in 2022 and failed to disclose those details during his hiring process.

Though the issue wasn’t brought up with the full board, a brief update on the CFO is included with the minutes of the board’s finance committee meeting from last Friday. At that meeting, Johnson told the committee that LMH has narrowed its CFO search down to “four very qualified candidates” who are all scheduled for their first round of in-person interviews. The minutes don’t indicate a hiring timeline for the position.

In the wake of Rogers’ firing, LMH announced several changes to its hiring process, including an extended timeframe for background checks.