An increase in the number of primary care physicians employed at the Martha's Vineyard Community Hospital is improving its financial performance, according to the chief executive officer.

For the nine months ended Dec. 31, the hospital posted a total gain of $3,902,556, ahead of both the projected budget of $2,184,430 and the actual performance in the comparable period the prior year of $2,250,233.

Chief executive officer Timothy Walsh said this week the increase in primary care physicians - from four physicians four years ago to eight today - is generating more referrals, and hence more business, at the hospital.

"We see primary care docs as the engine of health care at the hospital," Mr. Walsh said.

Also, for the second year in a row the Windemere Nursing Home and Rehabilitation Center has finished in the black. The nursing home, which is operated by the hospital, concluded its fiscal year Dec. 31.

Both the nursing home and hospital are housed in a campus off Linton Lane in Oak Bluffs.

Windemere posted a total gain of $57,821, although that number was less than the $74,566 projected for the year and the $149,233 actual gain in 2004.

Despite the lower gain, Mr. Walsh said, "We were thrilled to bring it in in the black. There's not a lot of room when things go wrong over there."

A positive sign: the average daily number of patients for the year at the 81-bed facility totaled 72.2, up from 69.3 the prior year. Given reimbursement levels of up to $200 per day, the slightly higher bed count can make a significant impact over the course of a year, Mr. Walsh said.

Windemere previously had lost money from the time it opened in 1994 until 2004. The nursing home, which operates under the corporate name of WNR Inc., was forced to declare Chapter 7 bankruptcy in 1996 when it defaulted on an $8 million bond that was used to build the home.

The Windemere bankruptcy later led to a Chapter 11 bankruptcy for the hospital. The hospital emerged from bankruptcy in 1998.

Business continued to rise last year at the hospital. Surgical procedures for the first nine months of the fiscal year rose 6.8 per cent when compared to last year, to 1,095. Laboratory tests rose 11.2 per cent, to 117,147.

Rehabilitative services rose 26.3 per cent, to 25,279, led by a 33.6 per cent increase in physical therapy treatments. Diagnostic imaging also rose at the hospital, by six per cent to 16,586. The big gain there came through a 26.1 per cent increase in the use of a magnetic resonance imaging machine that comes over to the Island on weekends.

Although acute admissions dipped 0.4 per cent to 782 over the nine-month period, other measures of hospital stays and visits rose. Emergency visits increased 3.7 per cent to 12,578; admissions to the skilled nursing facility rose 11.9 per cent to 113; and equivalent days of skilled nursing care increased 33.7 per cent to 1,346.

Operating revenues for the nine-month period totaled $30,210,783, which is 18.4 per cent higher than the same period in 2004. In-patient gross revenue increased 13.6 per cent to $11,226,322. Out-patient gross revenue leapt 26.7 per cent to $44,233,034.

Expenses grew as well, driven by the higher volume of business. Salaries and wages rose 12.8 per cent to $12,723,182. The big percentage increase in expenses came in contract labor, the employees such as nurses that the hospital brings in on a temporary basis to fill gaps in coverage. Contract labor increased 128.7 per cent to $828,747.

At Windemere, total operating revenue rose 10.6 per cent to $5,495,042.

Expenses rose 11.9 per cent, to $5,491,084. Salaries for the year actually fell nine per cent, to $2,788,650, reflecting employees who left but were not immediately replaced. The contract labor line showed a 67.4 per cent increase to $203,433.

The operating gain at the hospital comes as a capital campaign continues to raise money to renovate and rebuild the hospital, which is housed in an aging facility.

The campaign has raised more than $30 million in pledges toward the $42 million the hospital said is needed. To help raise the remainder of the money, volunteers now are seeking donations from each of the 6,500 Vineyard households with locally registered voters.