A 4 percent rate increase on all clinic and hospital services was approved at Tuesday’s meeting of Allen County Regional Hospital trustees.
The increase includes its clinics in Iola, Humboldt and Moran. It took effect Jan. 1.
Hospital administrators said several changes had been made to its services in the past year or so, which made the 2018 budget more challenging.
Rate increases do not have much impact overall, Larry Peterson, ACRH chief financial officer said, because most services are paid by insurance companies that have pre-determined pricing schedules or from Medicare reimbursements through the government.
“Those price increases don’t yield a lot because of the way we’re paid by our various payers,” Peterson said. “It’s a little more of an issue in the clinics but we don’t feel our prices are out of line. We feel pretty comfortable with that.”
Administrators are hoping the new clinics in Moran and Humboldt, additional physicians, the hiring of a new marketing and fundraising position, and the ability to offer an at-home sleep study option will increase the volume and revenue for both inpatient and outpatient services.
The hospital raised rates by 3 percent last year but prior to that had not raised rates since it divested with HCA in 2013. Hospital cafeteria prices also will increase by about 3 percent.
Administrative officials hope they can hold the line on expenses in 2018, after seeing unexpected increases like a 42 percent increase in employee benefit costs between 2016 and 2017, and significant costs to recertify the mammography department. They also hope to reduce the amount of contract labor the hospital uses as a way to cut costs.
Peterson estimated the hospital would earn an excess of about $709,693 in revenue compared to expenses; when other factors like depreciation are factored, the budget projects about $998,524 more in revenue compared to expenses in 2018. That money will be used to pay for a “bare bones” amount of capital equipment purchases this year and will set aside about $650,000 for future purchases.
SALARY increases were expected for some employees in hopes of making the hospital more competitive in attracting and retaining qualified staff.
ACRH will increase its salaries by 3 percent overall, but that doesn’t mean every employee will get a raise. Instead, administration will look at areas like nursing where competition for qualified employees is greater. They’ll adjust those salaries first and raise salaries in other areas with whatever money is left. Officials have not yet determined how they will distribute that money.
The last time salaries were raised was January 2016.
CAPITAL equipment purchases were cut to the “bare bones” in 2018 in order to plan for more expensive purchases in 2019 and 2020, Peterson said.
He hopes ACRH can keep its equipment costs at about $234,000 in 2018, even though the budget calls for $650,000 in its capital equipment fund. That’s because ACRH needs to set aside money for future expenses.
Peterson projected equipment costs of about $1.2 million in 2019 and $1.4 million in 2020. Mostly, the hospital will need to replace outdated equipment. Some of the needs include a scope system in surgery, mammography equipment, a medication dispensing system, upgrade the digital X-ray archive system and more.
“We’ve kind of pushed some of the projects back. They’re probably going to have to happen,” Peterson said.
