ROCK SPRINGS — The Memorial Hospital of Sweetwater County Board of Trustees approved its 2020 fiscal year budget this afternoon, with an increase coming in hospital charges and room rates for patients.
The budget takes effect on July 1, and Chief Executive Officer Irene Richardson gave the board an overview of things to come over the next 12 months. The financial performance goals for the 2020 budget were created by using the Standard and Poor’s benchmarks for BBB- rated hospitals as the standard for the hospital’s key performance indicators.
“That would be an improvement from where we’re currently at,” Richardson told the board. “Our overall goal is to try and improve the rating as part of our strategic plan.”
Richardson said the budget represents an improvement in the MHSC financial strength index to 2.67, up from 1.15 in FY2018 and -2.15 in FY2017. A score of greater than 3.0 indicates outstanding financial strength, she added.
Reductions in Revenue
MHSC recommended a 5% aggregate increase in gross charges and a 4% increase in room rates that would represent a 2.6% increase in net revenue “which is pretty much in line with inflation,” Richardson said. Over the past year, the hospital has seen an increase in its Medicare population which has affected the reduction in revenue.
“That affects our bottom line just knowing that a 1% increase in our reduction of revenue is about $1.7 million to our bottom line,” Richardson said. The hospital is anticipating a 1.8% reduction in revenue in the next fiscal year.
The hospital also requested $2,413,004 from the county for its maintenance fund yesterday so that “we can take care of some of the preferred maintenance on the building” which is now 40 years old. The county commissioners asked MHSC to decrease that request by $500,000.
Employees will also be getting raises in the next fiscal year. The hospital requested a 1.5% increase to the budget in order to move everyone into the appropriate salary range.
“We’re trying to stay up with Wyoming Hospital Association’s salary survey for the top six hospitals in the state,” Richardson explained. “Some staff might get a little less than that, some staff might get a little more, but that should put everyone in the range where they belong.”
The hospital is setting aside $3,000,000 for its capital budget and plans to fund capital purchases through operations, according to Richardson.
The days of cash-on-hand currently stands at 121 days, and the hospital is budgeting for 134 days in FY2020. The days in accounts receivable has been budgeted for 49.8 days whereas the BBB- benchmark for that is 51.8 days. The operating budget for the year has been set at 1.79% which is also higher than the S&P benchmark.
The Budget Breakdown
- Total Gross Revenue = $174,891,919
- Deductions from Revenue = ($85,175,365)
- Total Net Revenue = $89,719,554 (Gross Revenue – Deductions from Revenue)
- Other Operating Revenue = $2,452,598
- Total Operating Revenue = $92,172,152 (Total Net Revenue + Other Operating Revenue)
- Total Expenses = $90,518,552
- Net Operating Gain = $1,653,600 (Total Operating Revenue – Total Expenses)
- Operating Margin = 1.79%
- Standard and Poor’s BBB- benchmark – 0.30%
Following Richardson’s presentation, the board unanimously voted to approve the FY2020 budget.