The Martha’s Vineyard Hospital ended its fiscal year with a sharp drop in operating profits, although with year-end gains well north of $600,000, the institution remains comfortably in the black, defying predictions early this year of an operating deficit.

And like virtually every person and institution with money invested in stocks and bonds this year, on paper the hospital lost an enormous amount of value — more than $3 million — on its protected endowment monies.

The hospital statement of operations is published in the hospital annual report which will be distributed in the two Island newspapers on Thursday and Friday this week.

The hospital ended its fiscal year on March 31 with a net operating gain of $653,000, compared with a gain of $1.4 million the previous year, a drop of 47 per cent. The drop is far less than what was predicted earlier in the year by hospital chief executive officer Tim Walsh, who said he had been tracking a decline in patient volume.

In January Mr. Walsh projected that the hospital would end the year with an operating deficit of about $750,000 due to falling volumes, especially in the area of orthopedic services. At the time he attributed the drop to two factors: changes in orthopedic coverage as Dr. Raymond (Rocco) Monto moved a large chunk of his operating room business to the Nantucket Cottage Hospital, and also the recession.

“People are holding back, and we are all looking at how we live our lives and where we are going,” Mr. Walsh said at the time.

The hospital CEO did not return a telephone call from the Gazette yesterday seeking comment and analysis of the trends.

But numbers released in the annual report this week show a better picture than what was projected.

The report includes pie charts, statistics and operating numbers for the hospital and Windemere, the affiliated nursing home which operates on a different fiscal year, ending Dec. 31. No consolidated statement is included in this year’s report, and the hospital has stopped the practice of publishing statements of operations from previous years, making it necessary to go back to last year’s report to find the comparison.

The published numbers show that while total revenue was up, from $43.2 million in 2007-2008, to $47.9 million in 2008-2009, an increase of six per cent, total expenses were up slightly more, from $43.8 million to $47.2 million, an increase of seven per cent.

Salaries and wages were up seven per cent, from $21.5 million to $23.1 million, and fringe benefits were up 11 per cent, from $4.8 million to $5.3 million. Physician fees were down eight per cent, falling from $848,865 last year to $753,302 this year. Supplies and expenses were up eight per cent.

Windemere also ended the year with a drop in operating profits, down to $96,00O from $234,792 last year, a decrease of 41 per cent. Total revenue at Windemere was $6.5 million, down nine per cent from last year, while total expenses were $6.4 million, up two per cent from the previous year.

Income from endowment was also sharply down, coming in at $65,000 this year and mirroring an unrealized loss on investments of $3.4 million (the number last year was just $130,000). This likely can be tracked to the precipitous declines in the stock market that have occurred this year.

Annual giving was also down at the hospital this year, with $775,000 coming in through annual gifts compared with $932,000 last year.

Other news in the annual report includes a progress report on the new $50 million building — the largest construction project in Island history — which is due to be completed by next year. Financials in the report show that $18 million was released from restricted assets, most of which is likely money for the building project.

The hospital has a Web cam on the new building that can be viewed by going to

In January Mr. Walsh said pledges for the capital project had not been affected by the crisis on Wall Street. “We’ll know much better at the end of the year if there is any trouble,” he said.

Statistics published in the annual report show that emergency room visits (14,681), surgical procedures (1,763), lab tests (193,833), radiology (10,361), mammograms (2,090) MRIs (1,077) and physical therapy treatments (27,911) are all up this year.