LMH finishes 2019 with nearly $16 million operating loss; date for opening of major LMH West facility announced

photo by: Chris Conde

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

The final batch of financial numbers for 2019 didn’t change the diagnosis for Lawrence’s nonprofit hospital: It was a rough year for LMH Health.

The hospital posted a $15.8 million operating loss for 2019, its first losing year in more than a decade. To make matters worse, the hospital had budgeted to make an approximately $11 million operating profit in 2019. Add it all up and LMH had a nearly $27 million negative surprise for the year.

“Obviously we had a year that wasn’t consistent with our historical performance,” LMH Health President and CEO Russ Johnson told the hospital’s board on Wednesday. “We are focusing our energy on making sure 2020 is a full recovery.”

LMH is a nonprofit organization that is controlled by an operating board appointed by the City of Lawrence. But the hospital doesn’t receive any general taxpayer dollars for its operations, and thus it relies on its revenues exceeding its expenses in order to fund operations and capital projects.

In other words, more losses like 2019’s would spell trouble for the hospital. Johnson, though, told the board that there were signs of a turnaround in the making.

“We can’t declare victory, but I think we are seeing some of the signs of the work and investment that occurred in 2019,” Johnson told the board.

In 2018 and 2019, LMH Health added more than 30 doctors to its clinics and the hospital’s roster. Johnson said it has taken some time for those doctors to get established, but he’s now seeing numbers that suggest the new hires are paying off. LMH Health’s clinical visits are consistently near the 1,600-per-day mark, when they previously were often below 1,400 per day.

The biggest game-changer for 2020, though, might be a new contract with Blue Cross Blue Shield of Kansas, the state’s largest health insurance provider. While hospital executives never fully aired their grievances in public, it was clear that LMH leaders felt the rates the rates at which LMH was being paid for services by Blue Cross Blue Shield of Kansas was contributing significantly to the hospital’s financial struggles.

Johnson, at Wednesday’s board meeting, said the hospital’s new chief financial officer, Deb Cartwright, had successfully negotiated a new contract with Blue Cross Blue Shield of Kansas in her first 45 days on the job.

“Deb has been extremely engaged with Blue Cross to bring that contract to a more reasonable conclusion for 2020,” Johnson said. “It involves an increase in rates that is more reflective of how (they) are treating other providers. (The rates) are still not where they used to be; they are closer to where they used to be. That is a big rock in the recovery plan.”

While LMH’s operating loss totaled nearly $16 million, the hospital did post a $7.1 million profit from its investments and other sources that aren’t operating income. When those other revenues are accounted for, LMH Health finished the year with a $8.7 million loss, compared to a $13 million profit that was called for in the 2019 budget.

In other LMH news:

A big part of LMH’s plans for 2020 is the opening of its new LMH West campus. Johnson said the $100 million outpatient center plans to open to the public on Sept. 14.

The approximately 200,000-square foot medical building is under construction in northwest Lawrence near Rock Chalk Park. Johnson said LMH crews expect to begin moving into the facility by mid-July.

The center will house the LMH Breast Center; OrthoKansas; doctors’ offices for the Internal Medicine Group and Mt. Oread Family Practice; and several specialty medical practices and a retail pharmacy.

Lawrence Surgery Center also will conduct outpatient surgeries at the new facility. LMH leaders on Wednesday said the new building will have five outpatient surgery rooms plus a procedure room, an increase from the four surgery rooms available at the current outpatient center near Sixth and Maine streets. The new facility also will have space for two additional surgery rooms.

Johnson said LMH, which is a partial owner of the Lawrence Surgery Center practice, is close to finalizing an agreement with the practice that will call for the hiring of some additional surgeons.

LMH also said plans are on track to open a new primary care and urgent care center in south Lawrence. As we’ve reported, the facility will be in a portion of the former Pier One building on south Iowa Street, just south of 31st Street. Plans call for the center — which will have everything from a doctor’s office to a walk-in clinic for broken bones and minor emergencies — to open in May.

• Board members were told the LMH Health Foundation raised a record amount of donations to the hospital in 2019. It is the second year in a row the foundation has set a new fundraising record. The group plans to unveil the amount at its annual meeting, which is open to the public, at 5 p.m. Thursday at Maceli’s Banquet Hall, 1031 New Hampshire Street. Area residents Jan Breithaupt, Teresa Mulinazzi Kempf, Gary Sollars, and Eleanor Woodyard also will be given awards at the event for their service to the foundation.


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