LBJ finances steadily improving says 1st Qtr report
Despite improved finances during the first quarter of fiscal year 2014, the LBJ Medical Center says additional funds are needed to cover the “perpetual carryover of unbudgeted/ unfunded debts” and also to cover increased patient costs, according to the hospital’s first quarter performance report covering the period of Oct. 1 - Dec. 31, 2013.
The performance report, prepared by chief executive Joseph J. Davis-Fleming, states that LBJ did very well in patient revenue collection for the 1st quarter, raking in $10 million more than the $2 million budget projection. The increase, the report says, is “mainly attributed” to the late FY 2013 Medicaid and Affordable Care Act (or Obamacare) and the 2% wage tax payments that were made last November and December.
According to the report, total net patient revenue for first quarter came to $10.22 million compared to $2.53 million that was budgeted for this period.
It also says that operating expenses were 6.8% over budget at the end of the first quarter, but a 1.5% improvement over FY 2013. As usual, personnel costs were the biggest expenditures for the quarter — at $5.39 million — followed by $2.53 million for pharmaceuticals and medical supplies. Total expenses for the quarter came to $9.29 million while $8.70 million was budgeted.
“Overall, our actual performance [by the end of the first quarter] resulted in a $9.4 million net gain” due to the significant late funding payments received, and suspended vendor payments due to pending receipt of those late payments, said Davis-Fleming.
“LBJ is finally in a positive financial position to begin paying down significant past due vendor invoices and acquiring much needed new equipment and medical supplies, as well as filling over 100 vacant hospital positions - mostly clinical,” he said.
The report says the financial condition of LBJ “has been steadily improving” since last December, thanks to the support of the Lolo Administration and the Fono, when the hospital was approved a significant budget increase over the previous years.
(LBJ’s FY 2014 budget total is $52.57 million compared to FY 2013’s budget of $35.51 million, according to budget documents presented to the Fono last September)
Additionally, the increase in ASG subsidy will significantly increase LBJ’s ability to pull down additional federal funding via Medicaid/Affordable Care Act programs, and “is critical in finally providing the hospital with adequate resources to provide better patient care in compliance with federal standards”.
However, the hospital says more money is needed “to resolve perpetual carryover and unbudgeted/unfunded debt accumulated over the course of many years, as well as to adequately cover increased patient service needs and hospital operational costs due to the rise in chronic diseases and preventable deaths leading to increased demand for off-island patient specialty care referrals."
The report noted the increased demand for these referrals is due to lack of critical life-saving services, specialists and support resources locally.
It also says that expense reductions, which began last February, included such cost-saving actions such as freezing 71 vacant positions (mostly physicians, nurses and clinical support staff); suspending annual staff raises; eliminating capital and minor equipment purchases, along with education travel and training; reducing inventories and supply expenses (including the purchase of drugs for the pharmacy) — all of which is projected to total about $3.8 million by the end of the fiscal year, and this has "taken a dangerous toll on the hospital’s ability to provide adequate patient care services and comply with federally-mandated patient safety and quality standards.”
As a result of these measures, LBJ will continue to be “severely short-staffed” resulting in significant increases in overtime paid (in excess of $1.5 million in FY 2013) re-occurring equipment failure in radiology and lab and long delays for patients waiting for services, resulting in an overcrowded ER and continuing violations of federal patient care and overall operational standards.
It claims decreased receipt of budgeted funds from ASG Treasury over the past year has perpetuated the chronic financial hardships the hospital finds itself under each year, despite the efforts a new board and CEO have undertaken to get the hospital out of debt by reorganizing a more streamlined and cost-effective operations system at the hospital and to develop a more financially sustainable system for the future.
(Samoa News understands the report is referring to the ASG subsidy itself, which for FY 2014 is $6 million, up $2 million from previous years. It does not include the Department of Interior subsidy, nor the 2% wage tax proceeds.)
Following the first phase of the hospital re-organization process initiated seven months ago, the report says, the board and CEO “feel very comfortable that in moving forward, the reorganization will save more money for the hospital and improve patient care services in the long run.”
“Since the new CEO has taken over the helm at LBJ less than six months ago, he has identified numerous long-standing chronic system problems that must and will be changed as part of streamlining operations for cost controls,” the report further claims.
Moreover the board will also continue to seek ways to modify hospital policies that have created unjustifiable costs including two unfunded mandates at the hospital that have since been abolished by the board.
The unfunded mandates cited in the reports are: a 15-20% automatic salary increase for doctors on contract and an automatic 5% salary increment increase for career service staff.
With the performance report now at the Fono, several lawmakers are reviewing the data provided by LBJ as well as looking at the other challenges facing the hospital, before deciding whether to call a hearing to find out the actual financial status of LBJ as the end of the second quarter looms on Mar. 31 this year.