Indian River Medical Center reports financial turnaround
It’s been a while since the management of Indian River Medical Center has gotten public pats on the back. Last week, though, they were plentiful as CEO Jeff Susi and CFO George Eighmy trotted out the latest financial numbers that show improvement from a disastrous start to the fiscal year.
After a first-quarter loss of $4 million dollars, the non-profit hospital system appears to have reversed course, dredging up enough profit in January and February to fill in half of that hole. Even more reassuring, CFO Eighmy is projecting the organization will end the year in the black.
That outlook is based on numbers from not only the hospital, but the IRMC-owned doctor’s practices, known as Indian River Medical Associates, and Vero Radiology. The hospital’s debt stands at $36 million, said CEO Jeff Susi, adding that it is being paid off on a “very short amortization schedule.”
The hospital has one of the lowest debt loads in the state, Eighmy said.
In January, the hospital came out ahead by just over $1 million. February piled on another $812,000, leaving the hospital only $2.1 million in the red for the first five months of the year.
Projections for March excess revenue over expenses rise to $867,000, which leaves the hospital still in the red. But for April through September, the recently renegotiated rates at which commercial insurance companies reimburse the hospital are expected to go into effect, yielding more than $5 million in increased revenue compared to what would have been taken in with the old rate schedule. At this juncture, three of the four largest payers are ready to sign; the lone holdout is the smallest of the four.
Add to that windfall projected increases in emergency room visits, surgeries, urgent care visits and “new and enhanced offerings,” as marketing director Lewis Clark put it, and the hospital expects to net another $1.47 million by the end of the fiscal year.
The hospital’s Board of Trustees as well as the elected Hospital District Board have been anxiously awaiting the numbers as they begin an intensive six-month study of whether to keep or sell the hospital.
With this latest financial report, the relief was palpable last week as the executive duo made the rounds with their presentation.
The September through December loss was blamed partly on a hurricane that didn’t hit, but required extra staffing in case it did, an added expense that could not be recovered. Also, a number of procedures were cancelled and weren’t rescheduled, officials said. Total losses from the hurricane sideswipe: $1.2 million.
The equity the hospital has accrued over the past decade should be still more reassuring, Eighmy says: $100 million in gifts the Hospital Foundation has received and turned into specialized areas like the Heart Center and the Cancer Center have added substantial value. “What you don’t see is the philanthropy going directly into the buildings. That’s not in the income statement,” says Eighmy.
In addition, the hospital has $36 million in working capital and a two-to-one ratio of assets to liabilities, according to Eighmy. “We are looking good,” he told the hospital board of directors.
The hospital pension plan, frozen in 2002, is not yet fully funded, “but basically we’re fine,” said IRMC Chairman of the Board Wayne Hockmeyer, summing up after Eighmy’s presentation.
“This whole debate [on the hospital’s future structure] was largely based on this not being a financially solvent institution,” said Hockmeyer, who himself built a $1 billion business. “This is about the farthest from a failing institution as you can get.”