Citing a decline in use and changes to the health insurance industry, the Martha’s Vineyard Hospital is reporting an operating loss for 2011, the first unprofitable year in about a decade, the hospital said.
The hospital reported an operations income loss of $591,855 from April 2011 to April 2012. While total revenue was up from the previous year, expenses also increased at a higher rate.
Total hospital expenses were $59,239,092, compared to revenue of $58,647,237, according to the hospital’s annual report which is distributed as an insert in today’s Gazette. The hospital fiscal year runs from April 1 through March 31.
Hospital president and chief executive officer Timothy Walsh said this week the loss can be attributed to a decrease in patient volume and the fixed costs of running a small hospital in a rural area.
“It was a mild winter but I think it was more than that,” Mr. Walsh told the Gazette Thursday. Emergency room visits and inpatients were down about five per cent, he said, adding that changes to the health care industry and increases by insurance companies for deductibles and copays on emergency room visits may have contributed to the change. “We’re seeing the impact of that.”
“Not that we want people to be sick,” he added.
But the hospital has minimum amounts of staff working, and can’t go below that number, regardless of the number of patients seen, Mr. Walsh said.
Additionally, he said, there’s been a shift in health care coverage. Business decreased from patients with the so-called big three insurance plans, Blue Cross, Harvard Pilgrim and Tufts, he said, coupled with an increase in Medicaid and the state’s Connector health insurance.
“They pay us less,” Mr. Walsh said, noting that the hospital collects 33 cents per dollar as opposed to 70 cents per dollar that come from the three big insurers.
“So that’s a big shift when that happens,” he said.
Additionally, the hospital provided more than $6.1 million in uncompensated care in fiscal year 2012, which includes free care and bad debt.
“That’s just a reflection of the economy,” Mr. Walsh said. Despite a health insurance mandate in Massachusetts, he said, some people are uninsured. “Universal access doesn’t mean everybody gets it,” Mr. Walsh said, and some uninsured people get put in the free care pool.
In response to the change in revenue, the hospital is “now looking at everything by program,” Mr. Walsh said, with an analysis of cost structure. “The more I do it the more I realize there’s not much I can change, but I want to be able to present our case to the regulators, what it’s like on the Island. We are small,” he said.
At the hospital, there’s “very little room for adjustment on the expenses side — for most of the year, we’re on minimum staffing. We can’t go below,” Mr. Walsh said, regardless of the number of patients coming in the door.
The emergency room has one physician on staff 24 hours a day, seven days a week, he said, with more added in the summer. If volume drops, “there’s no way to cut staff.”
Bigger hospitals can cut back. We have one nursing unit. It’s the nature of what we are.”
A breakdown provided in the hospital’s annual report said that 35 per cent of the hospital’s funds came from Medicare, while 21 per cent came from Blue Cross, 16 per cent came from commercial insurance, and nine per cent came from Medicaid.
About 46 per cent of the hospital’s funds went toward salaries and wages; supplies and expenses took 27 per cent.
There were 14,111 emergency room visits, and 24,848 primary care visits. The hospital performed 1,794 surgical procedures, 201,812 lab tests, 2,377 mammography exams and 1,418 MRIs.
There were 131 births.
Mr. Walsh had cautious optimism for the future. “I think we’re okay. We have a very strong balance sheet,” he said. Staff won’t be cut, he said, though the nature of the hospital is that they can’t provide everything for everyone. “People need to go off-Island for certain things because we can’t do it effectively.”
“We have to just roll with the times — we’ll make it all work,” he said, though he said he has some concern for what the future looks like. “We could see a lot of dramatic change in the industry.”
Windemere Nursing and Rehabilitation Center, which is an affiliate of the hospital, had a slight operating income of $4,562 in 2011. According to the year-end report, 61 per cent of their funds come from Medicaid.
The hospital’s parent company is Partners Health Care, a nonprofit Boston hospital consortium that includes Massachusetts General Hospital, Brigham and Women and others. The Nantucket Cottage Hospital is also under the Partners ownership umbrella.