photo by: Austin Hornbostel/Journal-World

LMH Health CFO Rob Chestnut speaks during the LMH Health Board of Trustees meeting on Wednesday, May 29, 2024.

There was a time that Lawrence Memorial Hospital was among the most financially successful businesses in the city. The nonprofit hospital would frequently produce revenues over expenses — what we would call profit if the hospital were a traditional private company — of $10 million or more per year.

But that time has not been the last five years.

LMH Health — the parent company that owns the hospital and doctors’ offices across the area — has posted an operating loss four out of the last five years, as hospitals across the country have struggled, sometimes to the point of shuttering.

LMH has never been close to shuttering during the time period, but it would like to get much closer to turning a profit. This year may be the year.

The hospital on Wednesday reported its financial results through September, and it is currently profitable with three-quarters of the year now in the books. But it is not so profitable that a soft end to the year won’t wipe it all away.

Year-to-date, LMH has posted revenues over expenses of about $940,000. That’s better than the $5.9 million operating loss that LMH had posted during the same period a year ago.

New Chief Financial Officer Rob Chestnut — a former hospital trustee and former Lawrence city commissioner — said he’s optimistic that LMH will finish 2024 with positive operating income. He said finances have been helped by a slight increase in patients at the hospital, but a focus on controlling expenses also has been key.

“I think what we are seeing is some of the initiatives we are taking on with workforce optimization and just doing a better job of expense control are starting to have an impact,” Chestnut said in a brief interview with the Journal-World.

While the 2024 results have been an improvement, they are still falling well short of what LMH had budgeted for the year. The hospital had budgeted to have operating income of about $4.5 million thus far in 2024. In other words, LMH is about $3.5 million behind budget. But Chestnut, who joined LMH as its CFO in May, said the results have been improving as the year has gone on. He said the third quarter was the best period for LMH in 2024 thus far.

However, Chestnut also said the hospital is facing challenges with insurers that are denying claims at a higher rate than what LMH had expected. LMH also is engaged in negotiations with its most important insurance partner, Blue Cross Blue Shield of Kansas.

Blue Cross Blue Shield — the state’s largest health insurance company –is responsible for more than 50% of the insurance payments that LMH Health receives in a year. Its contract with LMH Health expires at the end of the year.

In 2021, LMH and Blue Cross Blue Shield engaged in tough negotiations that created widespread worry in the community that LMH would stop accepting Blue Cross Blue Shield, meaning patients would need to either find a different insurer, pay higher out-of-network fees, or move their health care to an out-of-town hospital.

Chestnut said he was optimistic that area residents shouldn’t have to worry about any such issues during this round of negotiations.

“We are confident there will be a reasonable agreement,” Chestnut said.

LMH President and CEO Russ Johnson on Wednesday also took the unprompted step at an LMH Board of Trustees meeting to tell the community that the hospital’s finances were strong. He also said its commitment to remain an independent hospital — rather than being part of a chain or a division of the University of Kansas health system — was solid.

Johnson said he made the comments because he has heard from community members who read the reports of struggling hospitals elsewhere and have questions about LMH’s future.

“Some people are maybe taking away that there is jeopardy or maybe we should be worried about the institution,” Johnson said. “Yes, it is a challenging environment, but the hospital is on very strong footing.

“We have every reason to feel confident about maintaining our status as a very fine, acute care, independent hospital in the future.”