As pandemic surges, LMH accelerates raises; hospital also reports progress with Blue Cross Blue Shield contract

photo by: Chris Conde

LMH Health is pictured in a file photo from October 2018.

The pandemic has delayed much this year, but leaders at LMH Health have decided it should speed up one thing — pay raises at the hospital.

At a special meeting Thursday evening, LMH’s board of trustees approved a 2.5% pay increase for hospital employees for 2021. But instead of waiting until the new year, the board agreed to make the pay increase effective on Dec. 13. In addition, the hospital has decided to move forward its “achievement awards” — which are similar to a performance bonus — so that they also can be paid before the Christmas holiday.

LMH leaders said the move, in part, was spurred by wanting to show gratitude for how the hospital’s approximately 1,600 employees have worked through the trying conditions of the pandemic.

“It was such a challenging year on so many levels, and the staff performed so admirably,” LMH Trustee Pat Miller said. “The entire community supports what they have done.”

Thursday’s decision will put $500 to $1,000 extra dollars into the pockets of many LMH employees before Christmas. The hospital’s achievement awards provide a $250 bonus to part-time employees, $500 for full-time, nonmanagement employees, $1,000 to managers and supervisors, and 7% of base salary to directors of the hospital’s various divisions.

Those bonuses will be paid on Dec. 18. In past years, when the hospital has given the bonuses, they often haven’t been awarded until well after the new year, when LMH had closed its financial books from the previous year.

“I want to express gratitude to the board,” LMH President and CEO Russ Johnson said. “I know your heart is around supporting our employees. I think this is going to mean a lot to them.”

The bonuses will total a little more than $900,000, and the 2.5% wage increase will total about $750,000 for 2021.

Johnson and other members of the executive leadership team of the hospital aren’t eligible for the awards program, and their compensation levels are approved through a separate process that is partly tied to specific financial results posted by the hospital. Board Chair Bob Moody said the board’s compensation committee met this week to discuss compensation issues for Johnson and the executive team. Moody said the compensation committee is scheduled to provide its recommendations to the full board later this month.

The finances of the not-for-profit hospital have improved since 2019 but still have faced many challenges during the year. The hospital posted a nearly $16 million operating loss in 2019, its worst financial performance in recent memory. Through October of 2020, LMH Health had posted revenues that were slightly above expenses, thanks in large part to about $8 million in federal assistance related to the pandemic. With the federal assistance included, the hospital had net income of about $400,000, year-to-date.

That’s an extremely small margin on revenues of about $233 million. However, hospital board members on Thursday were told of positive developments between LMH and the state’s largest health insurance provider, Blue Cross Blue Shield of Kansas.

As the Journal-World reported in November, LMH leaders said they were concerned negotiations with BCBS of Kansas would result in multimillion dollar losses in revenue for the hospital in 2021 and future years. The two parties were negotiating how much BCBS would pay for certain services provided to BCBS policy holders, which include large amounts of the state government and the University of Kansas workforces.

But on Thursday, LMH chief financial officer Deb Cartwright told the board the hospital had reached a new agreement with BCBS of Kansas on Monday.

“We were glad to get good news,” Cartwright said of the negotiations.

Cartwright indicated the new agreement eliminated fears LMH previously had of payment reductions that would have totaled $2 million or more.

The Journal-World asked for more details about the new agreement and its terms. LMH declined to release details of the contract, saying it was contractually prohibited from doing so. The agreement covers 2021, the hospital confirmed.

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