SVH eyes boosting revenue
Hospital boardmember David Chambers likened the financial picture at Sonoma Valley Hospital to a passage in Lewis Carroll's "Through the Looking Glass," when the Red Queen tells Alice, "Now, here, you see, it takes all the running you can do to stay in the same place. If you want to get somewhere else, you must run at least twice as fast as that."
Chambers said, "We're going to have to work harder and get less."
Sonoma Valley Hospital will need to cut expenses while ultimately boosting revenues across the board, most significantly in the surgery department, in order to make ends meet during the next fiscal year. The goal, while ambitious, is doable said new chief financial officer Rick Reid, during his presentation of the $50 million 2011-12 fiscal year budget to the Sonoma Valley Health Care District board on Thursday night.
"I think with proper management and monitoring ... it's very achievable," Reid said, adding, "This isn't really an option. If we want to make this a financially stable institution, we have to meet these goals."
Reid said, after reviewing the budget and patient volumes from last year, he wants to see an increase in revenues of 15 percent in surgical cases, 7 percent in inpatient medical care, 7 percent in outpatient volume, 5 percent in home-care services and 2 percent in the skilled nursing facility.
"How can you have these increases? It's really the involvement of these new physicians," he said. In the beginning of 2011, the hospital recruited a new orthopedic surgeon, a general surgeon and a primary care physician, which administrators hope will boost patient volumes. As part of its strategic plan, the hospital continues to develop its relationship with the PRIMA Medical Group to bring a wider variety of physicians to offer services in the Valley.
While simultaneously seeking to boost revenues, the hospital will be keeping an eagle eye on expenses, which continue to increase.
The state and federal government have both made cuts to health-care funding in the 2011-12 fiscal budget, which could mean less in reimbursement payments to the district hospital.
"We're losing about $400 on the average Medicare patient," said hospital Chief Executive Officer Kelly Mather, who added that Sonoma Valley Hospital is actually doing better than most hospitals in America, which lose an average of $2,500 on Medicare patient care.
"I don't think Sonoma is unique, all hospitals have to find better ways to operate and do more with less," Reid said.
Reid said he would hold monthly meetings with each department head to closely track costs. Most departments have already faced cuts, putting added pressure on the existing staff to offer the same quality of care with fewer resources.
"We're going to wear people down," Chambers warned. "The projection for 2012 is doable but we need continued discussion about whether this is right for us."
Like all budgets in recent years, next year's fiscal budget is reliant on continued revenues from the parcel tax, which was passed in 2008 and will sunset in 2013.
The board has already discussed plans for a new parcel tax campaign, but boardmember Bill Boerum cautioned against getting too comfortable depending on the community, saying "it must be our credo" to eliminate the parcel tax.
The board unanimously approved a budget that assumes a total revenue of $52.6 million with total costs of $51.5 million, for a net revenue of just over $1 million.