Hospital managers project $1.1 million loss for end of 2013

Hospital managers project $1.1 million loss for end of 2013

Michele Ellson
Alameda Hospital

Managers at Alameda Hospital are seeking approval of a budget that shows the hospital losing more than $1 million over the last six months of 2013.

The Alameda Health Care District Board will consider approval of the budget, which anticipates $42 million in net revenues and $43 million in expenses, on Wednesday.

“Hospital management have had ongoing financial challenges operating a small general acute care hospital with 24 hour emergency services in this very competitive health care environment,” managers wrote in a report to the board.

They said that lower payments for the services the hospital provides, along with pending bills for needed seismic and electronic health record upgrades and impending health care reform could pose additional challenges.

The hospital lost an estimated $2.3 million during the fiscal year that ended on June 30, the report says, up from $1.8 million in losses during the 2012 fiscal year and $1.6 million in losses in 2011. The losses grew despite the implementation of new services and the takeover of the Waters Edge nursing home – services that, combined, earned the hospital more money than expected last year, operating statements show.

They said they don’t think losses can be avoided.

“Although we do anticipate an improvement in the overall financial performance of the (Health Care) District during the first six months of FY 2014, we do not feel that all losses can be eliminated without negatively affecting the quality, service levels and performance of the hospitals operations,” they wrote.

Hospital managers are trying to put together an affiliation deal with Alameda Health System, the public health system Alameda County spun off in 1998, which could be before the board for approval in September. If approved, the affiliation – which would see the health system take over management and operation of the hospital – could be finalized by the end of the year. Additional budget details are to be offered in a few months, when more information about the progress of the deal is known.

The hospital’s leaders have been seeking out a partner who can help reverse years of losses and also, provide access to the money needed to perform state-mandated seismic upgrades and to digitize patient records. Hospital leaders have tried but failed to access the $15 million they’ll need to make seismic upgrades now due in 2015, and one board member said the hospital could run out of cash in as little as 15 months.

Alameda Health System’s managers agreed to extend a $1.5 million line of credit to help pay off months-old bills after the health care district board approved a letter of intent to negotiate a deal, which the board did in June. If the affiliation deal is approved, the amount doubles to $3 million, and AHS has agreed to find funding for Alameda Hospital’s seismic upgrades and digital record upgrades.

In addition to an operating budget, hospital managers will ask the board to okay a capital budget of $683,252. Items covered by the budget include computers and servers, an electronic health record build team, surgical equipment and a pharmacy software and surveillance system.

“Given the financial challenges reflected in the FY 2014 operating budget and given the capital projects that have already been approved or are in process, the amount of additional capital acquisitions being recommended is very limited,” hospital managers wrote.